UPDATE: David Jones Takeover News Sees Shares Jump 19%
This morning David Jones approached the Australian Securities Exchange and revealed it received an unsolicited letter from a non-incorporated UK entity who was interested in a takeover.
David Jones could be valued in excess of $1.4 billion according to the SMH. Following word of a potential takeover, shares rose by almost 20 per cent.
“The directors do not believe they currently have relevant information to enable them to qualify or value the approach but should this change will advise the market accordingly,” David Jones said in a statement this morning.
“In the meantime the directors recommend that shareholders treat related market comment cautiously.”
Currently David Jones and its rival Myer have been fronting the harsh retail climate.
The chief market analyst at City Index, Peter Esho, said the news will prompt merger and acquisition strategies to be put in play, but recognised the unusual nature of the proposition.
“On the approach itself, we can only say that it seems very odd. The unsolicited offer is from a non-incorporated UK entity about which no usual public information is available,” Mr Esho said.
“Perhaps it’s a new consortium or a collection of private business owners who want to get together and launch an offer. We think the David Jones board will be very careful in the way they engage with this party, keeping in mind the way Billabong recently knocked back an approach before seeing its shares fall by more than half.”
David Jones shares immediately rose following the news, rising 35 cents (15%) to $2.61, and climbing by 19% in early trade. Myer’s shares also rose by 9 cents to $1.63.
Update: New reports have surfaced alleging EB Private Equity, a UK firm, has made a $1.65 billion offer for David Jones.