SYDNEY (Reuters) - South Africa’s Woolworths Holdings Ltd (WHLJ.J) offered on Tuesday to buy the 12 percent of Australian clothes retailer Country Road Ltd CTY.AX it does not already own from billionaire Solomon Lew for A$213 million ($200.20 million).
The offer potentially ends a stand-off over bigger takeover target David Jones Ltd DJS.AX. Woolworths wants to buy David Jones, Australia’s No. 2 retailer, for A$2.2 billion but Lew has amassed a holding of just under 10 percent of David Jones, potentially enabling him to block the takeover.
David Jones shares were up 4.22 percent at A$3.95 in early trading in a weaker overall market.
The move by Melbourne-based Lew, who has held his minority stake in Country Road for 17 years, was widely seen as a tactic to force Woolworths, which owns the rest, to buy out his stake, currently worth A$172.28 million, at a profit.
Country Road’s thinly-traded shares were changing hands for A$4.83 on Jan. 14, making Lew’s stake worth A$59.44 million. The Woolworths offer would represent a gross profit of about A$159 million in five months.
On top of that, Woolworths has offered A$4.00 per share for David Jones, compared to the roughly A$3.90 Lew is believed to have paid for his 10 percent stake.
In a statement to the Australian Securities Exchange, Woolworths made no reference to the identity of the owner of the Country Road shares it was offering to buy, saying only that it hoped to extract “synergy benefits” from owning both Country Road and David Jones.
”In light of the proposed acquisition of David Jones, this is a common sense and timely opportunity to seek to reach full
ownership of Country Road,” Woolworths Chief Executive Officer Ian Moir said in the statement.
“If successful, the offer will allow (Woolworths) to delist Country Road, allowing (Woolworths) to simplify its group structure and fully integrate the businesses.”
David Jones said in a statement it continued to support the Woolworths offer but was assessing the implications of Lew’s stake in the company and “further developments could result in a further postponement of the scheme meeting”.
Reporting by Byron Kaye; Editing by Paul Tait and Stephen Coates