The share price of Australian retailer David Jones is in the spotlight today (April 9th) following the news of a massive takeover bid for the firm led by a South African company.
Shareholders of David Jones have been recommended to vote in favour of selling to Woolworths Holdings (WHL), with the offer coming only a short time after a bid from Australian rival Myer Holdings was turned down.
Gordon Cairns, the chairman at David Jones, has described the offer from Woolworths a "compelling proposal" but it will only go ahead if shareholders of both organisations vote in favour of the deal.
"David Jones is an iconic brand with a long and justifiably proud history. This is a compelling proposal which represents a significant premium to not only our intrinsic value, but also to broker valuations and recent share prices," said Mr Cairns.
David Jones is one of the biggest companies in Australia, with the department store chain running 38 stores spread out across the country.
WHL chief executive Ian Moir added that his firm does not believe the department store as a concept is dead, instead saying "mediocrity is dead". He said: "In short, we're buying this business to build a bigger southern hemisphere brand."
The WHL offer for David Jones stands at $2 billion (£1.2 billion), working out at four Australian dollars a share. Although WHL is primarily a South African company, it does have some experience of the Australian marketplace through its subsidiary Country Road Group.
The firm runs the Country Road, Trenery, Witchery and Mimco brands. Australia's retail sector, which employs more than 1.2 million people across the country, is currently valued at around the A$265 billion mark.
Paul Zahra, managing director and chief executive officer of David Jones, added: "I am pleased that the Woolworths proposal recognises the attractive outlook for David Jones including the benefits that have and will flow from the continued implementation of our Future Strategic Direction Plan. The Woolworths proposal is an endorsement of our Future Strategic Direction Plan and our management team."
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