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David Jones Merger

440 Words2 Pages

The acquisition of David Jones, at A$4.00 per share was at a premium of 25.4% on closing share price of A$3.19 on the 8th April 2014. This cost Woolworths R21,4 Billion with a premium value of R4,33 billion. The transaction was funded partly by existing cash (-R8, 651million), new debt facilities and equity funding (R10, 124million) which resulted in an increase in long-term debt R14, 922 billion. At the date of announcement, Woolworths share price closed at R64.65, a decrease of 7.58% from the previous days’ closing share price. As is generally expected in M&A activity, Harvard Business Review notes that in most instances the acquiring firm’s share price tends to fall, whereas the company getting acquired sees a noticeable increase in its closing share price. The rationale behind the premium paid was that Woolworths believed they add over A$130 million to the group’s annual revenues within five years. Subsequent to the David Jones acquisition, Woolworths now owns 100% of Country Road Group (CRG). …show more content…

Mr Moir argues that “It’s an international retail world these days and you have got to be of scale to compete. The really successful guys in the northern hemisphere are the guys with scale: it’s the Inditex, the H&Ms,” (Bdlive.co.za) he adds that. “We have got to be the equivalent of that in the southern hemisphere to create that barrier to

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