DJs saga ends in farce
Comedy or tragedy? DJs takeover tale has been captivating.
Somewhere in England, or Luxembourg or perhaps even closer to home, someone is having a big laugh at the expense of the David Jones board, its shareholders and the entire Australian investment community.
To the surprise of nobody who has been following the strange twists and turns around a curious $1.65 billion bid for David Jones from an obscure British private equity firm, that offer has now been withdrawn.
The bid, in fact, melted as fast as an ice cube in the Pilbara. And when David Jones shares came out of their trading halt this afternoon, the stock immediately dived back to the level before the takeover offer first emerged on Friday morning, before closing down 10 per cent for the day.
The entire farce has made a mockery of continuous disclosure rules and raises the question as to why the takeover offer from EB Private Equity was made public by David Jones in the first place when even the most basic forensic investigation of the company showed the takeover approach lacked credibility.
David Jones claims it was forced to make the offer public because of those continous disclosure rules and the fact an obscure blog in Newcastle, England, was set to leak the story anyway.
Just who owns that blog and the owner's motivation in this entire laughable saga remains unclear.
First there's the 20-year old web designer from West Yorkshire who created the EB Private Equity website and whose own site has disappeared along with her contact details.
Then there's the fact EB Private Equity's website had no contact information, not even a phone number, and nobody in the financial world had even heard of them.
As Reuters notes, EB Private Equity doesn't even rate a mention in Companies House, the registrar of privately owned firms based in England and Wales. Preqin, a private equity tracking firm, has never heard of them either.
EB Private Equity's British offices were then discovered to be a small building, perhaps appropriately positioned next to a wig shop, with a noodle shop on the other side.
EB's chairman John Edgar had never even spoken to David Jones executives on the phone, with all correspondence was via email. That's convenient, and perhaps even voguish given the world's growing penchant for social media.
EB Private Equity now claims it has been forced to withdraw the takeover bid because of the publicity around its offer which has made it difficult to proceed. Again, that's a strange result, given Mr Edgar hired a Sydney-based public relations firm to spruik its bona fides to gullible media.
Ultimately the joke is on all of us.
Our investors and our stockmarket authorities because continuous disclosure laws have heightened the importance of lawyers within corporates these days. All directors are scared witless of being sued by angry shareholders if they knock back a takeover offer - even if it originates from a backwater on the other side of the planet.
So David Jones was forced to inform the market about the approach, and so investors piled in and the share price rocketed.
The corporate regulator is said to be investigating this bizarre story, but they will probably find nothing. There may be a case for share price manipulation and there will be renewed calls for a better continuous disclosure rules to stop this happening again.
Otherwise we will see an avalanche of letters being sent to Australia's biggest listed companies making grandiose takeover offers which probably never have any intention of being executed.
It's a great idea for an April Fool's joke even if it is July.