In a statement to the Australian Stock Exchange, David Jones, Australia’s oldest department stores group, announced that EB Private Equity had withdrawn its takeover proposal, covered on FPF on June 29th.
EBPE withdrew their offer of A$1.65bn, citing the adverse publicity it received after David Jones disclosed the offer making it difficult to proceed.
The sharp growth in shares in the department store was short-lived, opening lower on Monday as both analysts and investors continued to question the likelihood of an offer emerging from EBPE. The claims of the bid being a hoax were rejected by EBPE’s chairman, John Edgar, who told Australia’s Financial Review that ‘a lot of work’ had been put into the offer for David Jones and that the bid was a tenable proposal on a practical and technical level.
In regards to financing, EBPE was to use A$850m of equity provided by an EBPE consortium, then covering the final A$900m, half in debt and the other half in residual equity which was to be made available to existing shareholders.
Despite the withdrawal of EBPE’s offer, analysts still consider David Jones to be vulnerable to further bids mostly on the basis of its valuable property portfolio. The two flagship stores have a book value of A$460m but this is considered to be a low estimate with higher estimates being more around the A$750m mark.
Furthermore, it is believed that the Australian Securities and Investment Commission is still to investigate the circumstances surrounding the offer. ASIC stated the matter had been under surveillance from the beginning and it will continue to conduct its enquiries in order to determine whether infractions were committed by David Jones.