DJs shareholders back $2.2bn takeover

David Jones shareholders have overwhelmingly supported a $2.2 billion takeover bid from South Africa's Woolworths with more than 89% of shareholders backing the deal.

At the scheme meeting in Sydney this morning, 89.6% of votes were cast in favour of the proposal -- well above the 75 per threshold needed for the bid to succeed --while 10.4% of votes were cast against. The result included the previously disclosed 96.48% of proxy votes cast in support the Woolworths offer.

Shares in David Jones were placed in a trading halt ahead of the vote, last trading at $3.93, slightly below the $4 per share offer price.

Some shareholders expressed concern about the sale of an "iconic" Australian business, but chairman Gordon Cairns said the offer was a "significant premium" on the value of their shares.

He said the takeover was the best way forward for the department store.

"We believe this takeover is good for shareholders, customers and staff," he told the shareholder meeting in Sydney.

Woolworths chief executive Ian Moir was not at the meeting after being advised by doctors not to fly, following a back operation two weeks ago.

The meeting had been delayed after billionaire retailer Solomon Lew revealed he had amassed a 9.89% stake in David Jones. There was no word from Mr Lew or his representative at the meeting, but he appears to have abstained from the vote.

The corporate watchdog also attempted to stifle it but last month, a Federal Court rejected a request by the Australian Securities and Investments Commission (ASIC) for an independent expert’s valuation of a claimed “collateral benefit” for Mr Lew from Woolworths’ agreement to a $213 million, or $17-a-share, mop-up bid for Country Road, most of which will flow to Mr Lew.

The court sided with DJs' position that a supplementary letter from Grant Samuel -- the independent expert for the DJs takeover -- sufficiently addressed events since the scheme booklet was sent to shareholders.

The prohibition on collateral benefits stems from a premise that all shareholders should have a reasonable and equal opportunity to participate in any benefits accruing to shareholders through a proposal under which a person would acquire a substantial interest in the company. Clearly DJs shareholders other than Lew won’t have an opportunity to benefit from the bid for Country Road, though the rule on collateral benefits is less clear for schemes than for conventional takeover offers.

The DJs board continued to unanimously recommend the offer to shareholders at the scheme meeting in the absence of a superior proposal.

But the takeover will still need approval from the Federal Court at a hearing later this week and corporate regulator the Australian Securities and Investment Commission could still throw a spanner in the works over concerns about the extra incentive offered to Mr Lew.