Is billionaire Solomon Lew going to spoil Woolworths Holdings’ David Jones party?

Is billionaire Solomon Lew going to spoil Woolworths Holdings’ David Jones party?

May 30, 2014 – 12:46PM

Eli Greenblat and Sue Mitchell

Premier Investments chief Mark McInnes and director Solomon Lew. Photo: Josh Robenstone

Retail billionaire Solomon Lew could be planning to derail the takeover of David Jones by South Africa’s Woolworths Holdings after it was revealed his private company has scooped up 0.65 per cent of David Jones issued capital.

David Jones said in an announcement this morning that a regular review of its share register showed SL Nominees had 3.5 million shares in the group, equating to 0.65 per cent of the department store.

Mr Lew is the sole director of SL Nominees. His son Peter Lew is an alternative director.

David Jones is currently the subject of a $2.2 billion takeover bid from Woolworths.

Like all companies of its size, David Jones conducts reviews of its share register regularly. A pending takeover like the one proposed by Woolworths Holdings usually increases the frequency of reviews.

Mr Lew’s presence on the David Jones register was discovered late on Thursday night.

So far, Mr Lew’s intentions for the holding remain unknown.

“You can never underestimate Solomon Lew,” said one source close to the former Coles Myer chairman. “You can never rule anything in or anything out,” the source said.

Mr Lew bought his 3.5 million David Jones shares – worth around $14 million – in the last few weeks, after the Woolworths takeover was announced.

One of David Jones’ biggest shareholders BT Financial is currently in meetings to discuss the development and its response.

Last month BT Investment Management’s head of equities, Crispin Murray, said Woolworths had offered a “reasonable” premium and welcomed the all-cash nature of the bid.

The 3.5 million shares were acquired through Mr Lew’s private company and not through Premier Investments, the retail group controlled and chaired by Mr Lew.

Premier has former David Jones chief executive Mark McInnes at the helm and is home to brands including Just Jeans, Dotti, Portmans.

Premier has also long been considered a potential bidder for David Jones or Myer.

It has more than $300 million in cash, no debt, a stake in Breville and could fund a $2 billion acquisition.

Mr Lew appointed Mr McInnes to run Premier three years ago and has hired at least a dozen senior David Jones and Myer executives, including David Jones’s former head of apparel Collette Garnsey .

Since Mr McInnes’s appointment, Premier’s shares have risen more than 50 per cent to $9.00 and its market capitalisation has risen by $700 million.

Neither Mr McInnes nor Mr Lew were available for comment.

A spokesman for Woolworths told Fairfax Media it wasn’t for it to speculate on why Mr Lew or anybody else has bought shares in David Jones.

”Our offer is in cash and is recommended by the David Jones board, there is nothing more for us to add.”

Woolworths and Mr Lew have crossed swords before, during a particularly bitter battle for clothing retailer Country Road staged nearly 20 years ago.

Mr Lew doggedly clung to just over 10 per cent of the publicly listed retailer, which blocked Woolworths from moving to compulsory acquisition and delisting from the stockmarket.

Country Road remains on the ASX, with Mr Lew and Woolworths controlling around 98 per cent of the issued capital. Its shares hardly change hands.

However, in the case of David Jones, history is unlikely to repeat itself.

Woolworths Holdings is seeking to take over David Jones through a scheme of arrangement and has declared an ”all or nothing” approach to buying the company’s shares.

However, Mr Lew will need more than 0.65 per cent of shares, or allies with larger parcels, to win the day against Woolworths this time around – if that is his plan.

The South African retail, meanwhile, needing 50 per cent of David Jones shareholders holding a minimum 75 per cent of the stock to vote in favour of the proposal to succeed in its bid