More than 176 years after its first store opened in Sydney, David Jones is passing into foreign hands after shareholders overwhelmingly backed a $2.2 billion takeover.
South African retailer Woolworths Holdings will take control of Australia’s oldest department store in August, pending court approval, and hopes to significantly improve its performance after years of sliding sales and profits.
A handful of shareholders spoke out against the sale at a meeting in Sydney on Monday, with some accusing the David Jones board of “giving up” on the Australian icon.
But most backed the move, with almost 97 per cent votes cast in favour of accepting the $4 a share offer, though some, like retiree Reg Lobb, did so with heavy hearts.
Lobb has a long history with David Jones. His mother worked there in the early 1900s and he’s owned shares since it was publicly floated in the mid-1990s.
He says David Jones had been damaged by poor decisions by management and the board.
“It’s tragic that it’s come to this. At least we can get $4 per share and get out,” he told the meeting.
Woolworths plans to overhaul David Jones by expanding its private label brands, improving instore service and website.
“We look forward to implementing our plans to reinvigorate David Jones and enhance the shopping experience for its customers,” CEO Ian Moir said in a statement.
The $4 offer was a solid outcome for shareholders, being more than 80 cents higher from where David Jones was trading prior to the bid and $1.50 above where it was a year ago.
But the biggest winner is retail mogul Solomon Lew, who bought a 9.9 per cent stake in the retailer after the takeover was announced, apparently to use it as leverage in a battle with Woolworths Holdings over fashion chain Country Road.
Almost all Country Road shares are held by either Woolworths, which owns nearly 88 per cent, or Lew, who owns just under 12 per cent, and the billionaire has reportedly been agitating the South African company to buy him out for years.
Woolworths has agreed to do that, offering more than $200 million for his Country Road shares on the condition he didn’t block the David Jones takeover.
He appeared to abstain from Monday’s vote.
Australian Shareholders Association spokesman Stephen Mayne said Lew would not have had enough votes to block the takeover.
“I think they have potentially been far too generous to Mr Lew than they needed to be,” he said.
The Australian Securities and Investments Commission (ASIC) has expressed concern over the offer to Lew and whether it constitutes a benefit not available to other David Jones shareholders.
ASIC could raise objections at a Federal Court hearing on Thursday, but Mayne said if the regulator wanted to act, it should be against the Country Road transaction.
Assuming the court approves the takeover, David Jones shares will be suspended from trading on Friday, with Woolworths taking control on August 1.
AAP
