David Jones shareholders back Woolworths bid

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IOL bus jun19 David Jones

AFP

People walk past the flagship store of Australian retailing giant David Jones in Melbourne's Bourke Street Mall. Picture: William West

Sydney - Shareholders of David Jones Ltd, Australia's No. 2 department store by sales, on Monday backed a $2 billion bid by South Africa's Woolworths Holdings Ltd, ending weeks of uncertainty over the intentions of top shareholder Solomon Lew.

The vote cements Woolworths' largest ever deal and marks a new era for the 176-year-old Sydney-based firm, which has languished for half a decade as online retail ravaged its traditional store-based model.

David Jones said 96.8 percent of shareholders had voted in favour of the deal at a special meeting on Monday.

The takeover has already been endorsed by Woolworths shareholders and the David Jones board, which has watched profits fall while the A$18.7 billion ($17.6 billion) department store sector shrinks and online shopping grows up to 30 percent annually.

“The combination of David Jones, an iconic Australian business, with Woolworths, one of the leading retailers in the southern hemisphere, will provide scale, an improved product range, an enhanced value proposition and acceleration of our core strategies,” David Jones chairman Gordon Cairns said ahead of the vote.

Prior to the Woolworths bid - which killed off two earlier approaches from Australian rival Myer Holdings Ltd - David Jones shares last traded over the A$4.00 offer price on July 11, 2011.

David Jones shares, which were halted on Monday, closed flat at A$3.93 on Friday.

The vote completes a key step in Woolworths' transformation from a South African company with offshore interests into an aggressive global player with the muscle to compete with the likes of Industria Textil Piura SA's Zara, H & M Hennes & Mauritz AB and Top Shop.

It also ends a lengthy stand-off between Woolworths and reclusive Melbourne billionaire Lew, the biggest David Jones shareholder.

Lew, who built his fortune investing in clothes retail, has prevented Woolworths from taking full ownership of another Australian clothes company, Country Road Ltd, for 17 years by keeping his 11.88 percent stake.

He threatened to derail the David Jones takeover as well, when just a month before shareholders were due to vote on the Woolworths bid he revealed he had built up a 9.89 percent stake in the department store chain.

The move established a potentially blocking stake in David Jones and was widely interpreted as an attempt to pressure Woolworths into offering to buy his Country Road shares at an inflated price.

On June 24, Woolworths offered to buy Lew's Country Road shares for A$17 each, 21 percent higher than their previous closing price. Lew paid roughly A$2.00 a share for his stake in 1997. - Reuters


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