South African mayor fashion player Woolworths announced on Friday that it had receivedapproval from the Reserve Bank for its acquisition of Australia’s David Jones.
Woolworths' 2.15 billion Australian dollars bid for David Jones Ltd was made public in early April and happened to be the second offer that the latter receives in the past six months. Woolworths has offered David Jones shareholders 4 Australian dollars a piece.
"This is a compelling proposal which represents a significant premium to not only our intrinsic value but also to broker valuations and to recent share prices,'' David Jones chairman Gordon Cairns recommended to all stakeholders in a note a month ago.
The acquisition supports Woolworths’ strategy to leave a mark in the southern hemisphere retail scene. The South African company´s profits have grown 20 percent a year over the past five years, proving its decision to increase its focus on apparel a very profitable one.
Woolworths announced Friday in an internal communication the full details of the proposed acquisition as well as a notice of a general meeting to be held on June 17 at which the Woolworths shareholders will be asked to approve all the resolutions in respect of the deal and matters pertaining to the implementation of the proposed rights offer, reported local media.
"Subject to shareholder approval, we intend to undertake a rights offer in order to repay the equity bridge facility after the acquisition has been completed. We will determine the detailed terms of the rights offer, including the amount of financing to be raised, the offer price and the number of shares to be issued, taking into consideration market conditions at the time. Once finalised, the details will be released on Sens and will be set out in the proposed rights offer circular to be posted to shareholders in due course," the retailer said.
The deal is expected to be completed by mid-July.