Shares in retailer David Jones Ltd [ASX:DJS] slumped by more than 2% today, lagging a soft Australian stock market. After holding north of $3.80 for most of the past two months, the stock is now starting to breach that level.
Last night David Jones announced that it would postpone a shareholder meeting to vote on a takeover offer from South African suitor Woolworths Holdings Ltd [JSE:WHL].
Woolworths needs 75% of the shares to vote in favour of its proposal for the takeover to succeed.
Solomon Lew, chairman of Premier Investments Ltd [ASX:PMV] has thrown a spanner in the works by quietly amassing a stake in DJs. The market believes he could potentially block the deal.
Mr Lew doesn’t necessarily control enough shares yet to kill the takeover off his own bat. But postponing the shareholder meeting indicates that DJs’ management is taking Mr Lew’s threat seriously while it seeks to understand his demands.
Free Reports:
The smart money is suggesting Mr Lew will try to negotiate a ‘hostage swap’, where Woolworths buys from Mr Lew the shares in Country Road Ltd [ASX:CTY] that it doesn’t already own…and in return Mr Lew might not block Woolworths’ takeover of David Jones.
The increased risk of the $4 per share takeover bid failing has put some pressure on the David Jones share price today.
Solomon Lew is a billionaire and a deeply experienced retail businessman. There is plenty of scope for him to throw his weight around and threaten this deal further. It’s hard to forecast how this story will play out from here, but now looks like a particularly risky time to wade in.
Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator