Woolworths recently announced that it was acquiring David Jones, ‘Australia’s oldest and most prominent department chain’ for R23.3 billion. But recent reports suggest that the gigantic deal might be under threat.

Just to bring you up to speed on David Jones:

David Jones was founded in 1838 by David Jones, a Welsh immigrant, and is claimed to be the oldest continuously operating department store in the world still trading under its original name. It currently has 38 stores located in most Australian states and territories.

Now here’s part of Business Day‘s original report, back in May, announcing the go ahead for the deal.

WOOLWORTHS said it had received the nod from the Reserve Bank for its R23.3bn acquisition of David Jones, taking the upmarket retailer a step closer to being one of the world’s top 10 department store operators.

The bid for Australia’s oldest and most prominent department chain was first announced in April.

Funding of the deal will be split between R3.98bn from an Australian bridge loan, R10bn from the combination of a short-term facility and Woolworths cash, and the balance of R9.37bn coming from an equity bridge facility.

The loans are underwritten by Citibank, JPMorgan Chase and Standard Bank.

Absa Investments analyst Chris Gilmour said he was bullish about the deal “and CEO Ian Moir’s ability to work this thing through the system”. Mr Gilmour said while David Jones was a quality asset, it was underperforming and therein lay the “value unlock”.

[more here]

But now the story has gone further and one Solomon Lew has entered the picture, and wants to block the takeover:

Billionaire retail mogul Solomon Lew is gathering his sizeable forces and cash reserves to potentially block Woolworths Holdings from seizing control of upmarket department store David Jones.

Mr Lew is using a newly acquired 0.65 per cent stake in David Jones to rally a ”no” vote when the deal is put before shareholders on June 30.

In the way – Solomon Lew

The future of the $2.2 billion takeover by South Africa’s Woolworths of Australia’s second-biggest department store David Jones was thrown into confusion on Friday when it emerged that Mr Lew, who is a former chairman of Coles Myer and currently the chairman of retail fashion group Premier Investments, had scooped up 3.5 million shares in DJs.

Although the stake, valued at about $14 million, represents less than 1 per cent of David Jones’ listed capital it is believed that Mr Lew will start to creep up the share register before investors vote on the takeover offer from Woolworths in a month and will rally others to his cause to derail the bid.

[more here]

Spicy – and it’s not the first time Solomon Lew has annoyed Woolworths. According to another report:

Mr Lew has a stormy history with Woolworths after he bought a minority 11 per cent stake in fashion retailer Country Road nearly 20 years ago, leaving Woolworths just short of 90 per cent control.

We’ll keep a close eye on this one.