Should you buy David Jones Limited shares right now?

Does this financial "Game of Thrones" episode for control of leading department store open opportunities for investors?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Things are about to get more interesting with the David Jones Limited (ASX: DJS) takeover bid from South African department store company Woolworths Holdings Limited (Johannesburg: WHL). What at first was seen as a masterstroke out of nowhere to snag one of Australia's leading department stores is getting mired down in financial intrigue.

What could happen if the takeover fails? How should investors be looking at the situation, and is buying David Jones shares wise?

We now know that Solomon Lew, chairman of Premier Investments Limited (ASX: PMV), has privately been amassing David Jones shares. With a 10% stake potentially under his influence, he may try to block the bid, make his own offer or try to get some board control.

Takeover offer block

If you didn't own David Jones shares before the takeover announcement, then buying them now is very dicey. If the takeover is scuttled or complicated so as to draw the process out, the stock could sink or even fall to the pre-bid price. Not much upside there.

Two-way bidding

Lew, a deeply experienced retail businessman and billionaire, may lob his own takeover offer in once he has a sufficient stake. How much over the $4 a share bid would he go? Again, buying shares now in David Jones may not yield you a great premium, but expose you to the downside if that bid or Woolworths' bid gets cruelled in some way.

Get control, settle a score

Like a Game of Thrones episode, this could be just for political maneuvering and power grabbing. Having a seat or several in any new David Jones board would give Lew strong influence to bargain. This may be fun to watch play out, but only from the sidelines for investors. Waiting for the battlefield to clear and see which side is victorious is the better choice for now. If David Jones shares do fall back to where they were before, then this story needs to be revisited.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »