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David Jones Offer Probed for Possible Disclosure Issues

David Jones Bid Probed for Possible Disclosure, Trading Issues
David Jones, Australia’s second-largest department store owner, said yesterday a U.K. private equity fund withdrew a A$1.65 billion ($1.69 billion) bid, causing the stock to reverse most of its biggest gain in 17 years. Photographer: Sergio Dionisio/Bloomberg

Australia’s markets regulator is examining possible disclosure and trading irregularities after a takeover offer for David Jones Ltd. collapsed days after sending the retailer’s shares soaring.

The Australian Securities & Investments Commission plans to pursue anyone who has broken the law, it said in a statement on its website today. The investigation covers domestic and international markets, ASIC said.

David Jones, Australia’s second-largest department store owner, said yesterday a U.K. private equity fund withdrew a A$1.65 billion ($1.69 billion) bid, causing the stock to reverse most of its biggest gain in 17 years. The Sydney-based company revealed the offer on June 29, saying it knew nothing about the suitor, its management or its financial capability.

ASIC’s priority is to ensure market integrity is maintained and that markets are fair, orderly and transparent and that, if there has been a breach of the law, those responsible are held to account,” the regulator said in the statement.

David Jones shares were unchanged at A$2.33 at 1:43 p.m. in Sydney today, compared with a 0.1 percent decline for the benchmark S&P/ASX 200 Index.

“We’re monitoring our own share price and transactions on our register,” said Helen Karlis, a spokeswoman for David Jones, when asked to comment on the regulator’s statement. “We’ve been engaged with ASIC since Friday.”

Takeover Speculation

David Jones has become the subject of takeover speculation after a 47 percent share slump last year and as slowing consumer spending prompted it to forecast its smallest annual profit in six years.

Analysts at Nomura Holdings Inc. and Macquarie Group Ltd. began questioning the credibility of the offer by EB Private Equity soon after it was announced by David Jones in a June 29 regulatory filing.

EB Private Equity had said it would lead a group providing $850 million in equity, according to the filing. The offer would also include $450 million of debt from a syndicate of banks and investors, and $450 million in residual equity for existing David Jones shareholders. The retailer recommended that shareholders use caution and said there wasn’t enough information available about EB Private Equity for David Jones to evaluate the approach.

‘False Market’

The retailer said in a statement to the stock exchange yesterday that announcements regarding the proposed bid were made to ensure that “there was not likely to be information in the public domain that would lead to trading based on a false market.”

It released the name of the bidder after a blog that calls itself newcastleetcfinanceblog posted that EB Private Equity bid 1.1 billion pounds, the equivalent of about A$1.73 billion, for the retailer.

EB Private Equity isn’t listed on the U.K.’s register of companies. Its website doesn’t include the names of any executives, phone numbers, or previous deals that involved EB Private Equity. The firm describes itself as a Luxembourg and U.K. real estate and real estate-related investor, developer and private equity partner.

“Our proposal was made in an effort to engage with the board,” EB Private Equity said in an undated statement on its website. “The board has made it clear it does not intend to engage in these discussions based on our proposal. This is our only statement on this matter.”

An e-mail contact for the firm no longer appears on the website. There was no immediate response to a voicemail message left outside of business hours today at a U.K. phone number registered for the website in Newcastle, England.

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