SA retailer Woolworths Holdings to buy Australia's David Jones for $2.1 bn
09 April 2014
South Africa's largest retail chain Woolworths Holdings Ltd has struck a deal to buy David Jones for $2.1 billion, winning a bidding war for Australia's second-largest department store with Australian rival Myer Holdings Ltd.
Woolworths offered A$4.00 per share in cash, a 25 per cent premium to David Jones's closing price on Tuesday and a 40 per cent premium to its close on 30 January when the Myer offer was made public.
Melbourne-based Myer, Australia's largest department store chain, withdrew its no-premium offer first made in October 2013.
"While we believe in the strategic merits of our proposal and the potential value accretion for both sets of shareholders, we have always maintained a disciplined approach to valuation, and as a consequence we will advise David Jones today of the withdrawal of our proposed merger of equals," the company said in a statement to the regulator.
Sydney-based David Jones had hired management consultant Port Jackson Partners Ltd as its strategic adviser after Myer tabled its a$1.7 billion all-stock takeover bid.
''This is a compelling proposal, which represents a significant premium to not only our intrinsic value but also to broker valuations and to recent share prices,'' David Jones chairman Gordon Cairns said in a statement.
Founded in 1838 by Welsh immigrant David Jones, the up-market chain is one of the oldest continuously operating department stores in the world.
It has 38 department stores and rack stores in most Australian states and territories located in major retail precincts and shopping malls. The company also has a financial services alliance with American Express Australia.
David Jones renovated its iconic Melbourne flagship store in mid-2010 at a cost of $250 million.
It has a market cap of A$1.7 billion and reported net profit of $A70.1 million in 2013 on revenues of A$1.8 billion.
Johannesburg Stock Exchange-listed Woolworths Holdings, modelled on the lines of British up-market retailer Marks & Spencer, was founded in 1931 by Max Sonnenberg and his son Richard.
Woolworths operates over 400 corporate and franchise stores throughout South Africa and neighbouring countries.
It also owns 90 per cent of Australian Stock Exchange-listed Country Road Limited, which offers apparel and homeware in its own retail stores and through concessions in major Australian department stores.