Australian department store chain David Jones Ltd. received an unsolicited $1.66 billion takeover offer from British private equity firm EB Private Equity.
This story first appeared in the July 2, 2012 issue of WWD. Subscribe Today.
While there’s some confusion over what the private equity firm is actually offering to buy, the existence of an offer has fueled speculation that the attention on David Jones might spur others to contemplate making offers of their own.
Robert Savage, the chairman of David Jones, on Friday disclosed to the Australian Securities Exchange that the firm received the offer from a non-incorporated U.K. entity, of which the usual public information was unavailable. He added that the company’s directors didn’t have any “relevant information to enable them to qualify or value the approach.”
In a subsequent update Friday, the retailer disclosed the terms of the offer, raising questions over what was really being acquired and for how much.
David Jones said the proposal was 1.65 billion Australian dollars, or $1.66 billion at current exchange, for a 100 percent acquisition of the retailer. The terms in Australian dollars are “850 million of equity provided by the [EB consortium], 450 million of lending provided by a syndicate of banks and investment institutions and 450 million residual equity for the existing David Jones Ltd. shareholders, a portion of this residual equity shall be underwritten.” The company said EB did not provide further details of its financial capacity, identify management or provide terms of the residual equity.
The amounts add up to 1.75 billion in Australian dollars, or $1.76 billion at current exchange, more than the amount stated in the offer for a 100 percent acquisition of the retailer. Further, the mention of residual shares raised the question that the offer might be just a partial bid.
EB’s Web site says the Luxembourg and Newcastle, U.K.-based firm has expertise in real estate investments but didn’t list recent deals or any of the firm’s principals.
Further complicating the situation, there was speculation in the Australian press over the weekend that the offer could be a hoax.
David Jones owns attractive real estate locations, particularly the Sydney and Melbourne flagships.
Shares of David Jones on Friday jumped 14.6 percent to close at $2.61.