Cape Town - Shareholders of Woolworths overwhelmingly backed the SA retailer's R21.5 billion ($2 billion) buyout of Australia's David Jones on Tuesday.
The acquisition, the biggest on record for the Cape Town-based company, was approved by virtually all Woolworths shareholders who cast their votes at a special meeting.
The deal, once finalised, would create one of the leading retailers in the southern hemisphere, benefiting from an increased number of stores and concurrent fashion seasons.
“This is transformational for Woolworths. This will allow us to take market share from others, both in South Africa and Africa,” Chief Executive Officer, Ian Moir said shortly after the meeting.
“It will allow us to protect ourselves from northern hemisphere entrants coming in and will allow us to be one of the biggest department stores in the world.”
David Jones shareholders are due to vote on Woolworths' cash offer of A$4.00 per share at the end of the month. The offer already has the support from the board of Australia's second-biggest department store operator.
Woolworths, which has no connection to the Australian supermarket chain of the same name, already has experience in that market, where it runs an upscale clothing retailer Country Road as well as another chain, Witchery.
Moir declined to comment on speculation that Australian billionaire Solomon Lew is building up a stake in David Jones to block the deal. Lew's declared holding in David Jones is 0.65 percent - too small to vote down the transaction later this month.
Woolworths plans to fund the acquisition with a mix of equity and debt. It plans to make a share offer in South Africa and raise new debt in both the local and Australian markets.
Its shareholders also backed the plan to issue more than 30 percent its stock for the rights offer.
Shares in Woolworths were up 1.3 percent at R78.8 by 1019 GMT and David Jones closed 0.52 percent higher at A$3.88 - a touch below the bid price.