David Jones agreed this week to be bought by Woolworths South Africa for $2.15 billion.
It is a deal for the shareholders, each receiving $4.00 for every share they own, a substantial increase on the price set by the market.
Still in a development stage, the deal which has been approved by the board of directors still needs its shareholders to accept the proposal as well as Federal Treasurer Joe Hockey.
“This is a compelling proposal which represents a significant premium to not only our intrinsic value but also to broker valuations and to recent share prices,” said Gordon Cairns, newly elected David Jones chairman.
Woolworths South Africa, which has no connection to the Australian Woolworths, also owns Country Road, Mimco, Witchery and Trenery brands and is valued at $5.6 billion.
The takeover bid crushed the hopes of rival Myer, who originally proposed a merger between the two companies in October last year and asked David Jones to reconsider just one month ago.
What this means for the future of David Jones is unclear, but there is speculation that it will be more private labels being sold and a stronger push to online shopping.
There is no doubt that this deal firmly cements David Jones once again as Myers chief competitor. A further concern is that this will isolate Australian fashion designers from the broader market as the large Woolworths Corporation will use private designers.