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David Jones Merger

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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…

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