South African retail giant Woolworths has unleashed a takeover bid to acquire all of Country Road, following its ongoing battle with industry power broker Solomon Lew.
As previously reported on ragtrader.com.au, David Jones has postponed a meeting relating to the next stage of its acquisition by Woolworths after Lew made a strategic shareholder move, complicating proceedings.
Lew now holds 9.89 per cent of David Jones shares, and is also a minority shareholder in Country Road, which is controlled by the same company seeking to takeover David Jones.
In response, Woolworths has today announced that it intends to make an all-cash offer to acquire all of the ordinary shares that it does not already own in Country Road at a price of A$17.00 per share.
Woolworths already has a relevant interest in 87.88 per cent of the issued shares in Country Road and accordingly the total cash consideration for the acquisition of the remaining shares under the offer is A$213 million.
Playing down the rationale for the move, Woolworths CEO Ian Moir echoed his company's sentiments and said the Country Road takeover is the “logical next step” for the group.
“In light of the proposed acquisition of David Jones, this is a common sense and timely opportunity to seek to reach full ownership of Country Road. If successful, the offer will allow Woolworths to de-list Country Road, allowing Woolworths to simplify its group structure and fully integrate the businesses,” he said.
The offer will be made by Woolworths wholly-owned subsidiary Woolworths International (Australia) Pty Limited or another wholly-owned subsidiary and is for all Country Road shares in which Woolworths does not already have a relevant interest.
The offer price of A$17.00 per share represents a premium of 21.4 per cent to the closing price of Country Road shares on June 23, 2014.
Commenting on its rationale for the takeover proposal, Woolworths said that “given the role of Country Road in realising a substantial part of the synergy benefits arising from the previously announced acquisition of David Jones achieving full ownership of Country Road is a logical next step and in line with Woolworth's long-standing desire to acquire 100 per cent of Country Road.”
The company added that the consideration Woolworths is prepared to offer Country Road’s minority shareholders has been determined having regard to the value of Country Road taking into account its financial performance and outlook.
This includes previously announced growth initiatives, combined with the future benefits that are expected to accrue as a result of the acquisition and integration of David Jones into the Woolworths group and the benefits derived from owning 100 per cent of Country Road.
Woolworths said it proposes to fund the offer through new debt facilities to be raised in Australia.
Rothschild and StandardBank are acting as financial advisers to Woolworths, with Gilbert + Tobin and Webber Wentzel acting as legal advisers.
Country Road has issued a statement in regards to Woolworths intention to takeover the remaining shares in the company and said it has “established processes” at hand to deal with these situations.
“Country Road has established processes for managing potential or actual conflicts of interests. The Country Road Directors, other than Woolworths representatives, will consider the details of the takeover offer and update shareholders in due course.”