Bid for Australian retail giant intrigues market

DAVID JONES, Australia’s second-largest department store owner, said yesterday it had received an unsolicited $1.65 billion bid from a consortium led by Britain’s EB Private Equity – a firm it did not know much about and was unknown to many market players.

According to its website, EB Private Equity is a real-estate investor that counts retail properties among its strategic interests. The website lists no telephone number and carries only basic information about its strategy.David Jones said it did not have sufficient information to evaluate EB Private Equity’s offer, which represents a 38 per cent premium to the stock’s closing price on Thursday.

“No details of EBPE’s financial capacity, its management, or any of the terms of the residual equity have been made available. No further details in relation to the proposal have been provided,” David Jones said in a statement.

According to the statement, EB Private Equity said it would lead a group providing $850 million in equity. The offer will also include $450 million of debt from a syndicate of banks and investors, and $450 million in residual equity for existing David Jones shareholders.

The bid values shares in David Jones at Aus$3.12 apiece. The stock finished yesterday at Aus$2.59, 15 per cent higher than Thursday’s close but far less than the offer price, reflecting the questions in the market about EB Private Equity.

“It’s just very, it is very mysterious,” Morningstar retail analyst James Cooper told the Australian Broadcasting Corporation. “There is no clear indication of . . . whether it is actually an offer or not,” he said.

David Jones has been seen as a potentially attractive takeover target, primarily for its property portfolio worth up to Aus$700 million (€566 million) that includes flagship stores in the heart of Sydney and Melbourne.

“Part of the attraction to David Jones is the underlying value of its prime properties, so it doesn’t surprise me that there is a property angle to the bid,” said Paul Xiradis, chief executive at fund manager Ausbil Dexia which owns 5.96 per cent of David Jones. “The value of the property could incite others to launch bids,” he said.

Other likely suitors include Premier Investment and global buyout funds. – (Reuters)