Disclosure repair needed in wake of mocking bid

The 20-year-old web designer from West Yorkshire who created the EB Private Equity website and whos own site has disappeared along with her contact details.SOMEWHERE in England, or Luxembourg or perhaps even closer to home, someone is having a big laugh at the expense of the David Jones board, its shareholders and the entire Australian investment community.
Nanjing Night Net

To the surprise of nobody who followed the strange twists and turns of the curious $1.65 billion bid for David Jones by an obscure British private equity firm, that offer has now been withdrawn.

The bid melted as fast as an ice cube in the Pilbara. And when David Jones shares come out of their trading halt – today or tomorrow – it’s a fair bet the stock will dive back to where it was before the takeover offer was made public on Friday morning.

The farce has made a mockery of the stock exchange’s continuous disclosure rules and raises the question of why the takeover offer from EB Private Equity was made public by David Jones in the first place when even the most basic investigation of the company showed the takeover approach lacked credibility.

David Jones claims it had to make the offer public because of the continous disclosure rules and the fact that an obscure blog in Newcastle, England, was about to leak the story anyway.

Just who owns that blog and the owner’s motivation remain unclear.

First there is the 20-year-old web designer from West Yorkshire who created the EB Private Equity website and whose own site has disappeared along with her contact details.

Then there is the fact that EB Private Equity’s website had no contact information, not even a phone number, and nobody in the financial world had even heard of it.

As Reuters noted, EB Private Equity does not rate a mention in Companies House, the registrar of privately owned firms based in England and Wales. Preqin, a private-equity tracking firm, has never heard of it either.

EB Private Equity’s British offices were then discovered to be a small building positioned, perhaps appropriately, next to a wig shop, with a noodle shop on the other side.

EB Private Equity chairman John Edgar had never even spoken to David Jones executives on the phone, all correspondence having been via email. That is convenient and perhaps voguish, given the world’s growing penchant for social media.

EB Private Equity now claims it has had to withdraw the takeover bid because of the publicity the offer attracted, which had made it difficult to proceed. Again, that is strange, given that Edgar had hired a Sydney-based public relations firm to spruik its bona fides to the media.

Ultimately, the joke is on all of us – our investors and our sharemarket authorities – because continuous disclosure laws have heightened the importance of lawyers within companies these days. All directors are scared of being sued by angry shareholders if they knock back a takeover offer – even if it originates from a backwater on the other side of the planet. So, David Jones was obliged to inform the market about the approach. Investors piled in and the share price rocketed.

The corporate regulator is said to be investigating this bizarre affair, but it will probably find nothing. There will be renewed calls for better continuous-disclosure rules to prevent a recurrence. Otherwise we will see more letters being sent to Australia’s listed companies making grandiose takeover offers, with no intention on the part of the bidders to follow through.

This story Administrator ready to work first appeared on Nanjing Night Net.