JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

DJs saga ends in farce

Comedy or tragedy? DJs takeover tale has been captivating.

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around a curious $1.65 billion bid for David Jones from an obscure British private equity firm, that offer has now been withdrawn.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.

Mockery

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.

Publicity shy

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.

55 comments

  • In the Market we trust! Hahahahahaaaaaa suckers. GFC2

    Commenter
    D.B. Valentine
    Location
    Melbourne
    Date and time
    July 02, 2012, 4:00PM
    • I believe it's titled "The GFC strikes back".

      Also please remember there is no money anymore anyway (aside from the 200 in everyone's wallet) its all numbers on a digital screen - and essentially hot air.

      All this hot air keeps it growing...

      Commenter
      Jon
      Location
      Melb
      Date and time
      July 02, 2012, 4:15PM
    • There is no other dollar store like David Gones.

      The group of people who did not do even the most basic due diligence should be held to account for this fiasco. From the price offered by the bidder something should have told them to double and triple check the people behind the offer.

      One might argue that people do not play around with such stuff hence the offer should have been taken seriously. Also an argument could be made that any potential leaks to the market as DJ tries to verify the offer could have had legal implications. Neither of these arguments are enough hide the failure to do some basic checks by the management like a phone call to the person concerned seeking more background information.

      Commenter
      Daaa
      Date and time
      July 02, 2012, 4:44PM
    • The only way to win in a completely rigged market is simply not to play.

      Three card monte, stocks or property? No thanks.

      ASIC had become a legitimizer rather than a regulator, it has come to believe its role is to rubberstamp schemes with approval.

      Commenter
      Pete
      Date and time
      July 02, 2012, 5:02PM
  • Look at the funds managers that have huge holdings in David Jones.
    They will get huge Management Fees because of the inflated share price.

    Commenter
    Docklands
    Date and time
    July 02, 2012, 4:01PM
    • You really have NO IDEA how funds management works. But thanks for the comment.......at least we all got a laugh. Sad how dumb some people are !

      Commenter
      jfk
      Date and time
      July 02, 2012, 5:45PM
  • As a sharemarket investor but thankfully, not in David Jones, this story had all the hallmarks of a farce from the beginning - presumably DJs did undertake some proper due diligence to see whom this entity was before informing the market. All this demonstrates is how Continuous Disclosure can be made a farce by those who see an opportunity to make mischief.

    Commenter
    NSW Observer
    Location
    Sydney
    Date and time
    July 02, 2012, 4:03PM
    • too right!

      not to mention a website that consists of a Home Page, and three others. No details on the management, phone contact etc. Basically, a $200 website that would have taken a few mins to pull together.

      Commenter
      $keptic
      Location
      Melbourne
      Date and time
      July 02, 2012, 5:04PM
  • Whatever happened to the proposed 'highly conditional' takevoer of PMP which saw the shares treble in value before easing back to current levels ?

    Commenter
    sharkanticz
    Date and time
    July 02, 2012, 4:04PM
    • Paul Zahra the CEO blamed the carbon tax in July 2011 for the downturn at DJ's so now he can blame this for the soft trading. See, there's always somebody or something else to blame!

      Commenter
      Steven
      Location
      Melbourne
      Date and time
      July 02, 2012, 4:05PM

      More comments

      Comments are now closed

      Related Coverage





      Featured advertisers

      Special offers

      Credit card, savings and loan rates by Mozo

      Executive Style