Hopes of a $1.65 billion takeover deal for David Jones have been dashed, with the mystery British private equity group behind the proposal making a quick retreat.
EB Private Equity (EBPE) on Monday withdrew its bid, citing concerns about publicity surrounding the deal.
The move came after David Jones surprised investors on Friday with news about the offer from the little-known private equity company.
After an initial share price surge when the offer was revealed, speculation began to mount at the weekend that the bid was not credible.
The stock sank by about six per cent in morning trade on Monday, prompting David Jones to seek a trading halt while it drafted a statement confirming the offer had been withdrawn.
Within an hour of the trading halt, David Jones released its statement, saying EBPE had withdrawn its proposal.
“The EBPE letter states that recent publicity around its proposal has made it difficult to proceed,” David Jones said in a statement.
“David Jones notes that in its response to the EBPE proposal on Friday, 29 June 2012, it requested further information from EBPE and offered, through its chairman Mr (Bob) Savage, to discuss the proposal with Mr Edgar, chairman of EBPE.
“In the light of today’s advice of a withdrawal of the proposal, no discussions are anticipated.”
Investors, who enjoyed a 15 per cent rise in the stock on Friday, were clearly disappointed.
David Jones’ shares sank by more than 13 per cent when they came out of a trading halt 10 minutes before the close of trade at 1600 AEST.
The stock closed 26 cents, or 10 per cent, lower at $2.33, with more than nine million shares having changed hands.
The Australian Securities and Investments Commission (ASIC) said it had received a number of inquiries about the EBPE offer and subsequent trading in David Jones shares.
City Index analyst Peter Esho said he did not think the incident would put off any genuine prospective buyers and David Jones had acted entirely properly under ASX rules by reporting the unsolicited offer to the market.
“I think anyone that’s genuinely interested in buying this business won’t be put off by what’s just happened,” he said.
“The value hasn’t changed, the numbers haven’t changed and the day-to-day running of David Jones hasn’t changed.”
But he said the approach was odd from the start and it was still unclear whether the bid was genuine.
“It was quite unusual,” he said.
“I’m sure there will be a lot of scrutiny of how David Jones shares were traded before the offer.”
EB chairman John Edgar was believed to still be looking for equity partners over the weekend to join its bid for David Jones.
He told Fairfax newspapers that EB had $US200 million ($A195.67 million) of funds under management but $US850 million ($A831.58 million) would be funded by equity, which means it must secure additional equity support from partners to buy David Jones.
EB Private Equity had also said it was interested in David Jones because of its estimated $A618 million worth of property rather than the retail business.
