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Woolworths marches on Australia's Country Road

SYDNEY -- South African retail giant Woolworths Tuesday announced a bid to buy out Australian fashion chain Country Road as part of its plan to take over prestigious department store David Jones.

Woolworths already owns 87.88 percent of Country Road but is offering AU$17.00 per share for the remainder — a 21.4-percent premium on Monday's close, it said.

The offer amounts to a total cash consideration of AU$213 million (US$200.7 million) for a stock that was trading at around AU$4.0 a share six months ago, before Woolworths' David Jones bid was announced.

Woolworths said given its tilt for David Jones, it was a timely to seek full ownership of Country Road.

“Given the role of Country Road in realizing a substantial part of the synergy benefits arising from the ... acquisition of David Jones, achieving full ownership of Country Road is a logical next step and in line with Woolworths' long-standing desire to acquire 100 percent of Country Road,” chief executive Ian Moir said.

If successful, the offer will allow Woolworths to de-list Country Road, permitting the South African company to simplify its group structure and fully integrate the businesses, he said.

Woolworths hopes its AU$2.1-billion takeover bid for David Jones will allow it to become one of the 10 largest department store operators in the world.

Its offer for Country Road is subject to the scheme of arrangement for David Jones becoming effective and approval by the Foreign Investment Review Board.

The board of David Jones unanimously backs the Woolworths proposal, and has recommended that shareholders vote for it in the absence of a superior proposal.

However, the department store noted that entities associated with billionaire Australian business identity Solomon Lew hold about 11.8 percent of Country Road, as well as about 9.89 percent of David Jones.

Lew is reportedly the biggest shareholder in David Jones and The Sydney Morning Herald said he was believed to be threatening to block the David Jones deal unless Woolworths bought his Country Road stake at a premium.

Woolworths made a AU$2.00-per-share takeover for Country Road in 1997, the Herald said, which was blocked by Lew's Australian Retail Investments.

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