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Market Update

Woolworths Links Offer for Country Road to David Jones Buyout

Author: Marcus Jacob
Last Update: 9:13 AM ET June 24 2014

5:00 PM Sydney – Australian indexes edged lower on the weakness in banks and resource stocks failed to build on early gains in the day. Australian dollar closed above 94 cents. Country Road surged on a conditional offer from South Africa based Woolworths.

Australian market indexes closed lower after the weakness in four large banks dragged broader market. Trading in small companies dominated the session and foreign investors focused on the direction of the Aussie dollar.

Australian dollar slipped to 94.22 U.S. cents. Stock trading turnover slipped to 649 million shares worth $3.7 billion.

ASX 200 index fell 20.50 or 0.4% to 5,432.80 and the broader All Ordinaries slid 17.60 to 5,415.10.

Stocks in Review

Country Road Limited surged 17.1% to $16.40 after the apparel and home goods retailer received cash offer from South Africa-based Woolworths Holdings Limited for the remaining stake it does not control for $17 a share, a 21.4% premium to its closing price of $14 at yesterday’s last trade.

Woolworths controls 88% of Country Road and remaining 11.8% is controlled by billionaire Solomon Lew and 179 minority shareholders control the rest.

Total enterprise value under consideration is $213 million or about 2.1 billion rand. The Woolworths’ conditional offer is based on the company winning its bid for David Jones.

The takeover of Country Road is linked to the David Jones acquisition and Woolworths chief executive Ian Moir in the past ran the retailer Country Road.

David Jones Limited climbed 3.9% to $3.94 after South African retailer Woolworths Holdings is in talk with department store management to finalize its $2.2 billion takeover offer.

The chief executive Ian Moir of Woolworths said the move makes sense given bid for David Jones. Long time shareholder, Solomon Lew holds a 9.89% stake in David Jones.

Kathmandu Holdings Limited plunged 12.1% to $2.92 after the outdoor goods retailer warned annual earnings to fall between 10% and 15% from a year ago on warmer than average weather in Australia and New Zealand.

SIMS Metal Management Limited rose 0.5% to $9.71 after the iron and steel foundry operator plans to sell its underperforming metal recycling business in the U.K. and Canada and write-down $115 million in assets.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc