Woolworths buyout of David Jones at risk
By Byron Kaye
SYDNEY (Reuters) – Australian billionaire Solomon Lew revealed on Wednesday he has bought a 9.89 percent stake in David Jones, throwing South African firm Woolworths Holdings' $2 billion buyout of the upmarket department store operator into doubt.
The quickly amassed holding – Lew had just 0.65 percent of the retail giant according to a May 30 securities exchange filing – gives the veteran investor the potential to block a deal recommended by David Jones's board and overwhelmingly approved by Woolworths shareholders on Tuesday.
That could force Woolworths either to lift its offer or buy out Lew's stake in its other Australian investment, clothes retailer Country Road Ltd. Lew has held his Country Road stake, currently 11.88 percent, for 17 years, preventing Woolworths from taking full ownership.
"It's most likely he's playing a gigantic game of poker," he said.
Spokespeople for David Jones and Lew declined comment.
David Jones shares were 0.39 percent higher at A$3.89 at 0551 GMT, lower than Woolworths's A$4.00 per share offer. The stock has only briefly traded at or above Woolworths's offer price since it was made on April 9, suggesting investors are unsure it will proceed.
"There's perhaps a little bit more doubt than there was a week or so ago."
The deal requires the approval of a 50 percent majority of shareholders with at least 75 percent of the stock. But only votes cast at the meeting are counted and David Jones historically had shareholder turnout as low as 50 percent, Ownership Matters's Paatsch said.
That means Lew could block the buyout with as little as 12.5 percent of the vote, Paatsch added.
($1 = 1.0639 Australian Dollars)