- A $3 billion all scrip merger offer was made on October 28 last year
- David Jones chairman Peter Mason knocked it back because he thought it undervalued the company
- It has now become apparent two non-executive DJs directors knew about the proposal before they bought shares
- One of Australia’s most respected fund managers and a leading shareholder has said the deal would make sense
- Mason is now under a lot of pressure, with his handling of the offer, his role in CEO Paul Zahra’s resignation and the directors’ share purchase under intense scrutiny
Here’s our coverage from earlier:
The fourth largest shareholder in David Jones, Allan Gray, is urging David Jones to reconsider a $3 billion merger with Myer that was knocked back last year, saying it “makes sense”.
Allan Gray director Simon Marais said if the merger had gone ahead when it was proposed in October last year it would have seen DJs gain sales of $4.7 billion and earnings before interest and tax of around $350 million, according to the AFR.
“I think it makes sense,” Marais said.
“Australia is too small to have two stores like that. If you put them together there should be more profits in the overall pool.”
Allan Gray holds more than five per cent of David Jones.
Both retailers are under pressure from foreign competitors as they look for new CEOs to replace David Jones’ Paul Zahra and Myer’s Bernie Brookes.
Concerns Over Director Share Purchases
Leigh Clapham and Steve Vamos, two David Jones non-executive directors, bought shares in the company a day after The a merger, according to the Australian Financial Review.
This week the corporate regulator said it did not have enough evidence to bring a case against the two directors, who also purchased the shares before sales data was released that saw David Jones’ share price rise.
ASIC has confirmed it is prepared to follow up the new information, after details of the merger offer — rejected as it did not provide a premium for control and undervalued the company — were provided to the newspaper yesterday.
However ASIC, according to the report, became aware of the merger offer during its initial investigation into the share purchase, when it examined emails sent between the two directors and Mason, as well as David Jones’ legal team.
It needs to be stated the two directors received permission for the purchase from Mason, and may have known the offer was going to be knocked back.
There’s more here.