Woolworths’ bid for the David Jones chain is slowly losing steam.Woolworths Holdings’ $2.2 billion takeover of department store David Jones is slowly slipping through its fingers, with rag-trader billionaire Solomon Lew elbowing the South African retailer and the David Jones board to delay a crucial shareholder vote on the deal by two weeks.
David Jones announced late on Thursday that together with the agreement of its takeover suitor Woolworths it had applied to the Federal Court seeking the postponement of the scheme meeting of David Jones shareholders which was slated for June 30.
A statement from Woolworths in South Africa overnight acknowledged the delay to the vote and said it supported the delay. The new scheme meeting date of July 14 means if the takeover is passed by shareholders, the proposal won’t be wrapped up until July 31.
Pulling out of the shareholder vote only 11 days before it was slated to take place in Sydney will be seen as a coup for Mr Lew, who has used his 9.89 per cent stake in David Jones to buy him more time to possibly amass more shares to form a blocking vote or rally other investors to his cause to stop Woolworths.
David Jones said in a short statement to the stock exchange on Thursday that the Federal Court had granted it the two-week extension to give time for the David Jones board to assess the implications of Mr Lew’s significant shareholding for David Jones shareholders.
Mr Lew’s Australian Retail Investments revealed on Wednesday it had spent more than $200 million buying 53 million shares in David Jones over the last few weeks, giving it just under 10 per cent of the company and possibly enough shares to vote down the takeover proposal when it is eventually put to David Jones shareholders.
It is unclear if the David Jones board, which unanimously supports the $4 cash per share bid from Woolworths, will have to seek further postponements of the vote.
The postponement comes as Woolworths shareholders in South Africa only four days ago voted overwhelmingly in favour of the takeover which would turn it into one of the biggest retailers in the southern hemisphere.
Woolworths boss Ian Moir is yet to state publicly his views on Mr Lew’s shareholding and if he is prepared to deal with Mr Lew and elicit his support for his ambitious David Jones takeover bid.
But the market is still unaware of Mr Lew’s actual intentions, whether he wants to make his own bid for David Jones, or squeeze out a side deal from Woolworths regarding his $160 million minority stake in Country Road where South Africa’s Woolworths is the major shareholder. Mr Lew has been stranded as a minority shareholder in Country Road for nearly two decades.
It is believed if Mr Lew is planning to wield his David Jones stake to drag Woolworths to a deal whereby it buys out his 11.8 per cent holding in Country Road, it could threaten to destabilise the entire David Jones takeover by triggering ”collateral benefits” obligations that guarantee all shareholders are treated equally.