Woolworths Holdings Limited to buy David Jones

South Africa’s Woolworths Holdings Limited (WHL) has agreed to buy Australian retailer David Jones Ltd. (DJS) for $2 billion with an aim to expand in a market targeted by its global rivals such as Inditex SA (ITX) and Hennes & Mauritz AB. The deal also gives WHL the buying power to compete against global fast-fashion groups including Zara, H&M and Arcadia Group Plc’s Topshop, which are expanding into both countries.

“We’re buying this business to build a bigger southern hemisphere brand. We’ve got real scale in the southern hemisphere; we’ve got the same seasonality, so we’ve got a real competitive advantage over northern hemisphere entrants,” says Ian Moir, Woolworths CEO. Southern hemisphere winters fall in the north’s summer, creating a challenge for incoming clothing retailers from Europe, North America and North Asia, Moir adds.

WHL had a robust negotiation with David Jones chairman Gordon Cairns over the price. The acquisition will be funded through a mix of cash, debt and a sale of new shares, with the value and other details of the equity raising to be disclosed in a shareholder letter in mid-May, reveals Moir.

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