David Jones (DJS) shareholders and South Africa’s Woolworths Ltd will have to wait until Thursday and a case in the Federal Court (not NSW Supreme Court) before the $2.15 billion takeover offer can be completed.
David Jones shareholders voted overwhelmingly in favour of the $4 a share offer from Woolworths at a special meeting in Sydney yesterday.
Media reports suggested Solomon Lew did not vote his 9.9% of David Jones for fear of falling foul of the corporate regulator which has already intervened and claimed Mr Lew could get a benefit from the deal because of the other bid by Woolworths for the minorities in Country Road (CTY).
That $17 a share offer, ASIC has claimed, could confer a benefit on Mr Lew, not available to other David Jones shareholders, because Mr Lew owns the overwhelming majority of the 11.8% of Country Road subject to the bid.
Under the terms of the Country Road offer from Woolworths, Mr Lew would not have received the $17 a share offer if he had voted against the $4 a share deal with David Jones.
Because the David Jones merger will be done via a scheme of arrangement, the Federal Court’s approval is needed.
And part of those proceedings involves the court asking whether any other parties (such as ASIC) object to the scheme of arrangement happening.
Proxies lodged ahead of yesterday’s shareholder meeting in Sydney voted overwhelmingly in favour of the takeover of DJs. The vote passed with 97% support and 3% voting against.
Analysts said that Mr Lew’s abstention from the bid means that ASIC should not be able to object at Thursday’s court hearing.
But even if Mr Lew had voted against the takeover it was unlikely he could have blocked it: the "no" vote would haveonly risen to 18%, short of the 25% required to stop a scheme of arrangement (which needs 75% of the shares cast to be in favour).
David Jones shares rose 1.2% to $3.98 yesterday afternoon, after a brief trading halt was lifted and trading resumed.
That tells us the market reckons the $4 a share bid will happen.
In statements after the meeting, David Jones chairman Gordon Cairns and Woolworths chief executive Ian Moir welcomed the strong support for the deal.
“I’m pleased that David Jones shareholders today had the opportunity to have their say in relation to the Woolworths Holdings scheme proposal.
“The result of the shareholder vote unequivocally demonstrates the overwhelming support amongst our shareholders for Woolworths’ $4 a share cash offer,” Mr Cairns said.
“We are delighted with the strong support we received today from David Jones’ shareholders,” Mr Moir said in a prepared statement. He was unable to travel to Australia because of a serious back operation in late June.
“The vote brings us another step closer to creating a leading Southern Hemisphere retail business with the necessary scale and common seasonality to deliver substantial benefits to our company and our customers.
“We look forward to implementing our plans to reinvigorate David Jones and enhance the shopping experience for its customers. The benefits of a more vibrant and successful operation will also flow through to our employees and suppliers,” Mr Moir said.
