(Corrects name of Zara's owner in paragraph 8)
* David Jones shareholders vote overwhelmingly for deal
* Says can now compete with large international players and
* Top shareholder Solomon Lew abstains from voting
By Byron Kaye
SYDNEY, July 14 Shareholders of iconic
Australian retailer David Jones Ltd on Monday approved
a $2 billion takeover from South Africa's Woolworths Holdings
Ltd, voting overwhelmingly to create a southern
hemisphere department-store giant.
Investors set aside their nostalgia about the 176-year-old
firm falling into foreign hands and embraced the chance to
thrust David Jones into the internet age, with Woolworths'
A$4.00 per share offer receiving 96.8 percent approval.
The takeover gives David Jones the financial firepower to
ramp up its online offerings and in-store label, while helping
Woolworths become a major global player with a combined $5.6
billion in annual sales.
"We believe David Jones as an Australian icon will be better
able to compete," David Jones chairman Gordon Cairns told about
500 shareholders at a meeting to vote on the scheme in Sydney.
Major shareholder Solomon Lew, a Melbourne-based billionaire
who threw Woolworths' bid into turmoil by amassing a potentially
blocking stake in the weeks ahead of the vote, abstained from
voting, meaning his votes were automatically redirected in
favour of the deal.
That came as a relief to smaller shareholders who have
watched Australia's No. 2 department fail to grow profit for the
past four years in the face of brash new competitors from abroad
and online. Woolworths' offer was higher than the stock has
traded in three years.
David Jones shares rose 1.27 percent to A$3.98 in a higher
David Jones and larger local rival Myer Holdings Ltd
have been struggling for half a decade as online retail
and so-called "fast fashion" chains like Industria de Diseno
Textil SA's Zara and H & M Hennes & Mauritz AB
have ravaged their traditional store-based model.
Shareholders at the meeting expressed concerns ranging from
foreign ownership to the possibility David Jones's in-store
pianists could lose their jobs. But even those with family ties
to the company's rich history were ready for change.
"It's what happens," said Professor Geoffrey Sherington, a
former University of Sydney education dean whose great
grandfather invested in David Jones in 1890 and was appointed as
a director in 1908.
"It's still an icon. People get very panicky about ownership
issues. It's sad, but companies pass on."
South Africa's Woolworths has no relation to Australian
grocer Woolworths Ltd.
The vote ends a long-running feud between Woolworths and
Lew, who emerged as David Jones's largest shareholder with a
9.89 percent stake just before the vote.
A veteran of Australian clothes retailing, Lew had prevented
Woolworths from taking full ownership of another Australian
clothes company, Country Road Ltd, for 17 years by
keeping his 11.88 percent stake.
His rapidly acquired David Jones stake was widely
interpreted as a ploy to pressure Woolworths into offering to
buy his Country Road shares at an inflated price in exchange for
his approval of the David Jones deal.
If that was his intention - he has revealed nothing publicly
- his gambit paid off handsomely on June 24 when the South
African firm offered A$17 for each of his Country Road shares.
Lew paid A$2 a share for them in 1997.
That deal raised concerns at the corporate watchdog, the
Australian Securites and Investments Commission (ASIC), about
whether Woolworths had in effect offered Lew an inappropriate
inducement to accept its David Jones bid.
So far no wrongdoing has been found but ASIC may again raise
objections when final approval for the takeover goes before the
courts on July 17.
In any event, Lew's longstanding lawyer, Jeremy Leibler,
attended Monday's meeting on his client's behalf and abstained
from voting, as some shareholders and ASIC had requested.
"The Country Road discussions are actually a sideshow,"
David Jones's Cairns told the meeting when asked if the
Woolworths offer amounted to preferential treamtent for Lew.
Leibler and a spokeswoman for Lew declined to comment.
($1 = 1.0654 Australian Dollars)
(Editing by Stephen Coates)