Large investors in takeover target David Jones have been tapped on the shoulder to lend out their securities to an unknown borrower, heightening speculation rag-trader billionaire Solomon Lew is stepping up efforts to build a blocking stake to derail South Africa's Woolworths $2.2 billion takeover of the department store operator.
Speculation surrounding Mr Lew's intentions keeps on expanding, with the suggestion that he wants to spoil the takeover bid from South Africa's Woolworths to pave the way for him to resurrect last year's proposal for a nil-premium merger between David Jones and arch-rival Myer.
Mr Lew is a former chairman of Coles Myer and was one of the retail conglomerate's largest shareholders through his Premier Investments holding before eventually the company was split, with Wesfarmers buying Coles and Myer taken by private equity.
He had built up his 6 per cent stake by parlaying an original holding in Myer into a stake in the combined Coles Myer business when it was fused in 1986.
A proposal last year from Myer to merge with David Jones was at first rebuffed by the upmarket department store, and then eventually blown out of the water by Woolworths' $2.2 billion offer in April, which came at a sizeable premium, especially compared with Myer's nil-premium deal.
However, the true intentions of Mr Lew remain shrouded in mystery, with the leading suggestion still that he wants to use the 10 per cent holding in David Jones as leverage to get Woolworths to buy out his $160 million minority stake in fashion chain Country Road.
There was heavy trading in the securities lending sector of the David Jones market last Thursday, with market participants also reporting that institutional shareholders had been approached on Friday to offer up some stock. The identity of the buyer looking to borrow the stock in David Jones remains unknown, although most believe it was Mr Lew.
Last week 10 per cent of David Jones' shares were on loan through securities lending arrangements, with that dropping to 5 per cent by Friday.
However, as it takes three days under the ASX systems to report changes in ownership, the true lending position of David Jones' issued capital may be revealed on Monday or Tuesday.
An initial dip in lending could also signal that the borrower had been able to fill their requirements by deciding to buy shares on the market.
These movements come as a vote on the Woolworths takeover has been extended, and is now 22 days away.
David Jones' share register has a large number of small investors - as opposed to a high proportion of institutional investors - and companies with such a strong lean to mum-and-dad investors typically have low turnouts at shareholder meetings.
David Jones needs 50 per cent of shareholders holding 75 per cent of the shares voted to succeed in getting the takeover passed.
At David Jones' annual meeting last year only 50 per cent voted, meaning Mr Lew could block the bid with as low as 12.5 per cent voting ''no''.