The David Jones board has recommended a surprise A$2.15 billion ($2.3 billion) takeover offer from South African retail group Woolworths, trumping any merger talks with Australian rival Myer.
Woolworths has offered A$4 per share to acquire David Jones, which is a 25 per cent premium to the retailer's last share price of A$3.19.
"I am pleased that the Woolworths proposal recognises the attractive outlook for David Jones including the benefits that have and will flow from the continued implementation of our Future Strategic Direction Plan,'' David Jones chief executive Paul Zahra said.
David Jones and Myer had been in discussions over a proposed merger between the two department stores. The deal was made public in late January, since then David Jones shares have jumped more than 10 per cent, while Myer shares have fallen close to 10 per cent.
Myer approached David Jones with a merger offer of 1.06 of its shares for each David Jones share, but it was rejected because DJs did not believe it represented sufficient value and had no premium.
''In the absence of a superior proposal and subject to an independent expert concluding that the [Woolworths] Scheme is fair and reasonable and in the best interests of David Jones shareholders, the Board of David Jones unanimously recommends that David Jones shareholders vote in favour of the Scheme,'' the company said in an announcement to the Australian Securities Exchange.
The takeover will require the majority of David Jones shareholders to vote in favour of the deal. It is anticipated that shareholders will have the opportunity to vote in mid-June 2014.
David Jones is being advised by Gresham Advisory Partners, Macquarie Capital and Herbert Smith Freehills.
- Sydney Morning Herald