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The abrupt end of the short-lived takeover offer came as doubts were already growing about the credibility and funding of the $1.65 billion takeover bid by EB Private Equity.
Investors reacted swiftly, sending the shares sliding further after trading resumed following a halt of about 140 minutes. The shares dived, ending the day down 10 per cent, or 26 cents, at $2.33.
Despite the slide, the shares remain above the $2.26 level they changed hands for prior to the company’s statement of a takeover approach on Friday.
‘‘The EB Private Equity letter states that recent publicity around its proposal has made it difficult to proceed,’’ David Jones said in a statement to the stock exchange this afternoon.
David Jones said in light of the new advice that the offer from EB Private Equity had been pulled, it expected no further discussions with EB Private Equity’s mysterious chairman John Edgar.
Directors and officers of David Jones have never spoken to Mr Edgar via phone since the takeover offer was made on Friday with the parties only corresponding via email.
EB Private Equity is not listed in Companies House, the registrar of privately owned firms based in England and Wales, nor recorded by private equity tracking firm Preqin.
The company earlier asked for a trading halt in its shares as confusion spread about the takeover offer.
David Jones called the halt at just after 1.30pm, AEST. The company’s shares at that point were at $2.45, down 5.4 per cent for the day or 14 cents.
When David Jones shares resumed trading in the final 11 minutes of the session, about five million shares changed hands – more than the daily average over the past year.
Friday’s volumes were about six time higher than the average for the past 12 months, with the retailer’s shares soaring 19 per cent at one point.
In asking for the trading halt, David Jones earlier today told the Australian Securities Exchange that it was examining correspondence from EB Private Equity.
There was already growing unease among investors and fund managers over the weekend as to the bona fides of the approach for David Jones and EB Private Equity’s chairman and director Mr Edgar.
Mr Edgar engaged in a public relations strategy yesterday to spruik the credibility of his offer in the face of mounting concerns and questions about his offer and his ability to fund the billion dollar takeover proposal.
It is believed the Australian Securities and Investments Commission is investigating the nature of the takeover offer and its effect on the share price last week, as well as the identity of EB Private Equity and its backers.
Wigs and noodles
EB Private Equity’s UK offices have been traced back to a two-storey, dreary building in Newcastle, England, nestled between a wig shop and a noodle shop.
Analysts had already begun questioning the seriousness of the offer. At $1.65 billion, such a bid would have been about a quarter more than the current value of David Jones at just under $1.3 billion.
“There is significant uncertainty over the legitimacy of the bid given the lack of information on the bidding consortium,” UBS analyst Ben Gilbert said prior to the trading halt.
“Given the bid appears highly dependent on property development, it is unlikely the value they see in the business is accessible to the broader market. This limits the scope for a competing bidder.”
Mr Gilbert said the bid implied a value of 11 times earnings before interest and tax for the financial year that began today, or a 40 per cent premium to David Jones’ global peers. That tally indicates the offer was too rich.
BusinessDay with Reuters
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