On so many fronts, ASIC has been nothing if not forthright recently as it steps up its market surveillance and oversight.
Yesterday it appeared in the Federal Court to request an order appointing an independent expert valuation on what impact the deal to buy Solomon Lew out of Country Road has on the valuation for David Jones.
That is, the “collateral benefit” that will be derived by Lew from the price he receives for his firm’s 11.9% stake in Country Road and what, if any, over-valuation of these shares is reflected in that price.
What ASIC is questioning is whether any over-valuation would then flow to an effective premium Lew would receive for his blocking stake in David Jones over and above other shareholders.
It is a great question for ASIC to ask in the interests of market integrity because if Lew’s company was to be receiving a “collateral benefit” then this increase in share price being paid for David Jones shares by Woolworths of South Africa, would – under Australian law – need to be extended to all shareholders of David Jones.
While the court refused ASIC’s request, favouring the David Jones assertion that a valuation from Grant Samuel was all that was necessary, this is another sign to corporate Australia that our once seemingly quiescent corporate watchdog is a new beast.