The $2.15 billion takeover of David Jones (DJS) by the South African retailer, Woolworths, is all but wrapped up following approval from the Foreign Investment Review Board.
All that now remains is for the offer documents for the $4 a share cash offer to be completed and sent to shareholders of the Sydney-based retailer.
It is clear from yesterday’s 3rd quarter sales figures that Woolworths timed its offer very well – David Jones is getting some very solid sales growth.
Had the bid been made yesterday, the offer price might have been north of the $4 a offer on the table now, such is the sales momentum the retailer is exhibiting.
The FIRB board had notified South Africa’s Woolworths Holdings that the federal government had no objection to its proposed takeover of David Jones, DJSsaid on Tuesday.
"The David Jones Board continues to unanimously recommend that David Jones shareholders vote in favour of the Scheme at the upcoming Scheme Meeting, in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is fair and reasonable and in the best interests of David Jones shareholders," the company said in a statement yesterday revealing the FIRB greenlight.
David Jones shares closed at $3.96 yesterday, up half a cent.
DJS Vs MYR 1Y – David Jones leaves Myer stranded
News of FIRB’s approval came after David Jones announced a 4.1% increase in topline third quarter sales (to $407.2 million).
Helping was a six month contribution from a new department store in Melbourne.
The strong growth means the retailer is on track for its first year of positive growth for four years.
Same-store sales were 2.4%, continuing the growth momentum that emerged earlier this year as shoppers started returning to stores.
Excluding the electronics category (which converted to a retail brand management agreement with Dick Smith in October), like-for-like sales would have risen 3%, David Jones pointed out.
Online sales rose 190% (from a very low base) and now account for more than 2.2% of total sales.
David Jones again outperformed rival Myer, which last week reported total sales fell almost 1% to $646.5 million in the April quarter as it refurbished stores, while same-store sales growth rose by just 0.24%.
That makes the timing of the Woolworths’ swoop on David Jones that much more impressive for its timing.
David Jones has now posted three consecutive quarters of total sales growth and two consecutive quarters of same-store growth, and analysts are confidently forecasting another positive growth story for the current quarter.
The scheme (of arrangement) booklet providing full details of the Woolworths proposal is expected to be mailed to shareholders late this month and the scheme meeting will be held in late June.
The takeover may be subject to approval by both David Jones and Woolworths shareholders, but analysts and business media pointed out that David Jones is already behaving as if the offer has succeeded.
They said that for the first time for quite a while, David Jones cancelled its regular three-month sales presentation yesterday with analysts and media and issued a brief one-page statement outlining the latest results. It usually provides much more detail in the statement to go with the briefing.
