South Africa's Woolworths Holdings plans to acquire department store retailer David Jones Limited (ASX: DJS) has hit a major hurdle, after Solomon Lew announces 9.9% holding stake earlier this week.
David Jones has been forced to postpone a critical shareholder meeting to give its board more time to consider the implications of Mr Lew's move. Mr Lew is a veteran retailer and current chairman and majority shareholder in Premier Investments (ASX: PMV), as well as holding an 11.9% blocking stake in Country Road Limited (ASX: CTY).
Woolworths holds 87.9% in Country Road, so Mr Lew now has blocking stakes in two companies Woolworths would dearly like to own outright.
As we suggested in this article, and has now been picked up in the financial press, Mr Lew may want Woolworths to buy him out of Country Road, in exchange for him selling out of David Jones, or perhaps selling their 87.9% stake in Country Road to Mr Lew. That would certainly surprise the market, but
Whatever the case may be, much of this is speculation given Mr Lew has not made his intentions publicly clear.
But the current postponement of David Jones' shareholder meeting may give Mr Lew more time to increase his stake in the retailer. According to the Australian Financial Review (AFR), Mr Lew would need between 12.5% and 15% to totally block the deal, and the AFR reports that around 10% of David Jones shares are on loan through securities lending arrangements. Mr Lew may already hold some of those loaned shares, potentially giving him the blocking stake he needs.
With more moves yet to play out, the dance around David Jones is far from over, and rival and potential suitor Myer Holdings Ltd (ASX: MYR) is still waiting quietly in the shadows.
