SYDNEY — Australian retailer David Jones said Wednesday its board recommends a 4 Australian dollar, or $3.73, per share takeover offer from South African retail group Woolworths. That price values David Jones at 2.15 billion Australian dollars, or about $2 billion.
“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 to recent share prices. It represents a substantial earnings multiple,” said David Jones chairman Gordon Cairns.
Shares in David Jones Ltd. surged 22.5 percent on Wednesday as investors digested the news. They finished the day on the Sydney exchange at 3.91 Australian dollars, or $3.64.
The announcement blindsided the market, following three months of speculation over the fate of David Jones. Rival Australian department store chain Myer made an unsolicited 3.2 billion Australian dollar ($3 billion) share swap merger proposal for David Jones. That deal was made public in January. Last month, David Jones announced it had appointed three investing banking and management consultants to assess the proposal.
Woolworths’ 4 Australian dollars share-price offer represents a 25.4 percent premium to David Jones’ closing price on April 8 and a 39.4 percent premium on the price of David Jones shares on Jan. 30.
Shareholders will have the opportunity to vote on the Woolworths proposal in late June.
Citigroup analyst Craig Woolford said he estimated the Woolworths deal could achieve 50 million Australian dollars, or $47 million, in synergies.
“Woolworths has a significant own-label range in both food and nonfood. The company also owns 88 percent of [Australian fashion chain] Country Road. We expect the most significant synergies are in sourcing, adding private label and improved merchandising. Woolworths South Africa — and Country Road — also operate a strong loyalty program and have experience in financial services,” Woolford said.
“The key remaining question is whether this proposal will result in other global department stores taking a closer look at David Jones. The synergies for Woolworths are boosted by its Southern Hemisphere connection, but we could not rule out another bid,” Woolford said.
However, IG Markets analyst Evan Lucas believes another deal is unlikely.
“Looking at the share trading this morning, it would suggest the market thinks this deal is probably fair value and you’re unlikely to see another deal coming in over the top,” said Lucas. “If they thought there was another deal, it would be 4.10 to 4.15 Australian dollars ($3.82 to 3.87), but the fact that it’s under suggests the market believes this the right deal and it’s fairly valued,” Lucas said.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews