Woolworths’ play for Country Road



Country roadSouth African retailer Woolworths is making a $213 million takeover bid for Australian clothing chain, Country Road.

Woolworths said the bid was for all the remaining shares in Country Road that it does not already own.

Woolworths, which already owns 88 per cent of Country Road, is offering $17 a share as part of its cash offer.

The expected bid comes as Woolworths tries to overcome hurdles with its $2.2 billion takeover of David Jones after retail billionaire Solomon Lew bought a blocking stake in the department store chain.

Lew confirmed last week that he now holds a 9.89 per cent stake in David Jones, after paying about $200 million for more than 53 million shares in recent weeks.

Analysts believe that the retail veteran had been threatening to block the David Jones acquisition unless Woolworths acquired his Country Road stake, which is now worth about $170 million.

Analysts believe he may have been trying to block Woolworths’ takeover of David Jones in order to get the South African retailer to buy his 12 per cent stake in Country Road.

A previous attempt by Woolworths to buy Country Road in 1997 failed after Lew bought a stake in the clothing retailer.

“In light of the proposed acquisition of David Jones, this is a commonsense and timely opportunity to seek to reach full ownership of Country Road,” Woolworths CEO, Ian Moir, said on Tuesday.

“If successful, the offer will allow Woolworths to delist Country Road, allowing Woolworths to simplify its group structure and fully integrate the businesses.”

Woolworths’ offer of $17 a share is a 21.4 per cent premium to Country Road’s closing price of $14 on Monday.

One of the conditions for the takeover offer is that Woolworths’ takeover of David Jones goes ahead.

David Jones said in a statement that it noted Woolworths’ bid for Country Road and was continuing to assess the implications of  Lew’s 9.89 per cent stake in the department store chain.

It also flagged that a planned meeting of David Jones shareholders to vote on the Woolworths takeover offer on July 14 could be postponed again.

Meanwhile, David Jones continues to recommend shareholders accept the Woolworths offer for their shares.

“As at the date of this announcement, no superior proposal has emerged, accordingly the David Jones directors intend to vote all the David Jones shares held or controlled by them in favour of the Woolworths proposal,” David Jones said.

Country Road said its directors will consider the details of Woolworths’ takeover offer and update shareholders in due course.

“Shareholders do not need to take any action at this time in respect of the proposed takeover offer,” Country Road said.


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