By Claire Reilly
The Australian Securities and Investments Commission has announced that it will be investigating a proposed takeover of David Jones by the relatively unheard of company EB Private Equity (EBPE).
The news follows days of industry speculation surrounding the takeover, which was originally announced by David Jones on 29 June, before being withdrawn by EBPE yesterday due to “publicity” surrounding the proposal.
In a statement on its website, ASIC said it had been “monitoring developments closely since the offer was made public on 29 June 2012 and its withdrawal on 2 July 2012.
“Consistent with its usual practice, ASIC is looking at potential issues regarding disclosure and trading in David Jones stock both by domestic and international parties,” the statement read. “ASIC’s priority is to ensure market integrity is maintained and that markets are fair, orderly and transparent and that, if there has been a breach of the law, those responsible are held to account.”
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Providing interesting background to the debacle was David Jones itself, which yesterday released a letter written by company secretary Caroline Waldron and directed to Australian Securities Exchange Compliance.
Waldron outlined the timeline of events surrounding the takeover offer, saying the original communication directed to the retailer “contained a highly conditional, uncertain and incomplete expression of interest in making an offer for the company [David Jones].
“The company had concerns about EBPE’s expression of interest and noted that the value indicated in the letter significantly undervalued the company. The company subsequently wrote to EBPE indicating that because of the highly conditional, uncertain and incomplete nature of the proposal, the company was not in a position to give consideration to it.”
According to Waldron, David Jones’ own investigations into the EBPE offer were originally “unable to obtain any meaningful information”, and this has not changed. DJs received a second takeover offer from EBPE on 28 June.
“Despite this expression of interest being expressed to be ‘an unconditional offer subject only to legally required due diligence’, this letter was again highly conditional, incomplete and uncertain in many respects, and contained no details of EBPE’s financial capacity, its management or any terms of the residual equity which was part of the offer.”
Following these offers, Waldron said the company became aware that media outlets – including a “UK blog site” and the Sydney Morning Herald’s online site – were intending to publish details about the offer and its proposed value.
“In the afternoon of 2 July 2012 the company received a letter from EBPE informing it that EBPE has decided to withdraw its proposal.”
While the takeover offer has been withdrawn, few details about EB Private Equity have surfaced and the reasoning behind the offer is unclear. David Jones' share price initially jumped almost 15 per cent when the offer was originally announced, before falling 10 per cent when the company's trading halt ceased.