David Jones taken over by Woolworths SA

David Jones, Australia's only upmarket department store, has fallen into the hands of South African retail giant Woolworths, in a deal worth $2.15 billion. 

Woolworths, which already has a majority shareholding in Country Road, has out muscled Myer, which had proposed a merger deal between the two departments. Myer withdrew its offer this morning.  

In an announcement to the ASX, the board of David Jones said it unanimously recommended the offer to its shareholder, which will see Woolworths acquire all of DJ's shares via scheme of arrangement. 

The proposed scheme offer is for $4 cash per share - reflecting a 25.4% premium to its closing price on 8 April. 

Woolworths chief Ian Moir said the combination of the two would create a "leading southern hemisphere retailer with meaningful scale, able to leverage common fashion seasonality with enhanced sourcing capability". 

"Woolworths will bring extra capability, financial strength and significant scale to accelerate these strategies and offer a greatly enhanced value proposition, delivering on-trend product within the most exciting and innovative shopping experience in the market".  

David Jones chairman Gordon Cairns described the proposal as "compelling", which represented a "significant premium to not only our intrinsic value but also to broker valuations and to recent share prices". 

"It represents a substantial earnings multiple". 

In reaching its conclusion, he also said the board considered a number of alternatives. 

Among them were "standalone value creation opportunities, realising the value of the freehold properties owned by David Jones or pursuing a merger with Myer. 

As at noon, the upmarket retailer's share price was up 23% or 73c to $3.923. 

Shareholders will have an opportunity to vote on the scheme proposal in late June.