Woolworths deal worries Australia’s regulator
The Australian Securities and Investments Commission (ASIC) raised its concern about Woolworths Holdings’ A$213m ($201.5m) offer to buy the billionaire investor’s 11.88% stake in Country Road in a Federal Court application on Wednesday. The application was rejected, according to Woolworths.
Mr Lew, who has refused to sell his stake in Woolworths’s Country Road since 1997, has amassed a holding of about 10% of the Australian department store David Jones, raising speculation that Woolworths offered to buy his Country Road stake at an inflated price to convince him to sell David Jones.
"Despite having 17 years to do so, Woolworths did not decide to make (the Country Road) takeover offer until Mr Lew acquired a material stake in David Jones," the regulator said in its court submission.
"The offering or giving of any (benefits not available to other David Jones shareholders) would be expressly prohibited in the analogous circumstances of a takeover bid," it said.
The ASIC court application is the latest in an increasingly complex and personal saga, but is not expected to derail Woolworths’ $2bn bid for David Jones, Australia’s second-largest retailer.
David Jones has postponed its shareholder vote on the deal by two weeks, to give it time to consider the effect of the stake Mr Lew amassed over just a month.
Calling for an independent valuation of Country Road shares, which in January were worth a third of the A$17 a share that Woolworths is offering Mr Lew, ASIC said it was concerned the offer offended the equality of opportunity principle in the Corporations Act.
Country Road shares are trading at almost 30 times its trailing 12-month earnings, compared with David Jones at 23 times, and rival Myer Holdings at 12 times.
Woolworths should provide a report including an expert valuation of the Country Road shares to ensure shareholders had full, fair and meaningful information on the nature and magnitude of benefits receivable by Mr Lew, ASIC said.
David Jones on Wednesday reiterated that an independent expert had maintained the takeover plan was fair and reasonable and in the best interests of shareholders.
A spokeswoman for Mr Lew was not available for comment.
The regulator said its next course of action would be influenced by any more disclosures by Woolworths to other David Jones shareholders.
The regulator did not give a timeline.
Source: bdlive.co.za
