SYDNEY (Reuters) - Shareholders of David Jones Ltd, Australia’s No. 2 department store by sales, on Monday began a crucial meeting to vote on a $2 billion takeover bid from South Africa’s Woolworths Holdings Ltd.
The vote for the offer would end years of uncertainty about the future of the 176-year-old Sydney-based firm, which has languished for half a decade as online retail ravaged its traditional store-based model.
Prior to the Woolworths bid - which killed off two earlier approaches from Australian rival Myer Holdings Ltd - David Jones shares last traded over the A$4.00 offer price on July 11, 2011.
The takeover has already been endorsed by Woolworths shareholders and the David Jones board, which has watched profits fall while the A$18.7 billion department store sector shrinks and online shopping grows up to 30 percent annually.
A vote for the takeover would also complete a key step in Woolworths’ transformation from a South African company with offshore interests into an aggressive global player with the muscle to compete with the likes of Industria de Diseno Textil SA’s Zara, H & M Hennes & Mauritz AB and Top Shop.
It would also mark the end of a lengthy stand-off between Woolworths and the biggest David Jones shareholder, reclusive Melbourne billionaire and former Myer chairman Solomon Lew.
Lew, who built his fortune investing in clothes retail, has prevented Woolworths from taking full ownership of another Australian clothes company, Country Road Ltd, for 17 years by keeping his 11.88 percent stake.
He threatened to derail the David Jones takeover as well, when just a month before shareholders were due to vote on the Woolworths bid he revealed without explanation that he had built up a 9.89 percent stake in the department store chain.
The move established a potentially blocking stake in David Jones and was widely interpreted as an attempt to pressure Woolworths into offering to buy his Country Road shares at an inflated price.
On June 24, Woolworths offered to buy Lew’s Country Road shares for A$17 each, 21 percent higher than their previous closing price. Lew paid roughly A$2.00 a share for his stake in 1997.
Lew has still not disclosed how he plans to vote in relation to either of the Woolworths offers for Country Road or David Jones, although he is generally expected to give them the nod.
David Jones shares, which were halted on Monday, closed flat at A$3.93 on Friday.
Reporting by Byron Kaye; Editing by Stephen Coates