Updated June 24, 2014 2:28 a.m. ET
SYDNEY— Woolworths Holdings Ltd. WHL.JO -1.35% Woolworths Holdings Ltd. South Africa ZAc7735 -106 -1.35% June 24, 2014 5:00 pm Volume : 5.12M P/E Ratio 0.22 Market Cap ZAc66.41 Billion Dividend Yield 2.61% Rev. per Employee ZAc1,459,310 06/24/14 Woolworths Pursues Fashion Sho... 04/09/14 Australian Retailer David Jone... 04/09/14 Deals of the Day: Uninspiring ... More quote details and news » offered more than 200 million Australian dollars (US$188 million) to Solomon Lew, as it attempts to stop the local billionaire from obstructing its foray into Australia's retail sector.
The South African retailer began its foray into Australia when it began buying into Country Road Ltd. CTY.AU +17.14% Country Road Ltd. Australia: Sydney $16.40 +2.40 +17.14% June 24, 2014 4:10 pm Volume : 652 P/E Ratio 29.80 Market Cap $1.45 Billion Dividend Yield 2.18% Rev. per Employee N/A 06/24/14 Woolworths Pursues Fashion Sho... More quote details and news » in 1998 but it has been thwarted from full ownership by Mr. Lew, who has long held an 11.8% stake in the clothing shop.
In recent weeks, Mr. Lew has also disrupted Woolworths's WOW.AU +0.17% Woolworths Ltd. Australia: Sydney $35.73 +0.06 +0.17% June 24, 2014 4:27 pm Volume : 1.58M P/E Ratio 18.33 Market Cap $44.94 Billion Dividend Yield 3.64% Rev. per Employee $307,051 05/28/14 Woolworths May Spin Off Hotel ... 05/06/14 HSBC Unit to Sell Woolworths C... 04/30/14 Japan Leads Asian Shares More quote details and news » A$2.15 billion bid for Australian department store chain David Jones Ltd. DJS.AU +3.96% David Jones Ltd. Australia: Sydney $3.94 +0.15 +3.96% June 24, 2014 4:10 pm Volume : 5.47M P/E Ratio 23.04 Market Cap $2.04 Billion Dividend Yield 5.08% Rev. per Employee N/A 06/24/14 Woolworths Pursues Fashion Sho... 04/09/14 Australian Retailer David Jone... 04/09/14 Deals of the Day: Uninspiring ... More quote details and news » by amassing a 9.9% stake in the target.
Woolworths on Tuesday offered minority Country Road investors, including Mr. Lew, a cash payment of A$17.00 a share to buy them out, representing a 21% premium to the shares' last traded price of A$14.00. The offer is conditional on Woolworths's takeover bid for David Jones succeeding.
A Sydney-based spokeswoman for Mr. Lew declined to comment Tuesday on how he will respond.
"There has been no prior agreement with Mr. Lew regarding the Country Road offer," a spokesman for Woolworths said in an emailed statement. "The offer is now open for Mr. Lew and all other minority shareholders in Country Road to consider."
David Jones and Country Road shares jumped as investors anticipated that Mr. Lew could be tempted by the healthy premium put on the table.
Country Road gained 21% to A$16.99, while David Jones climbed as much as 4.5% to A$3.96, just below Woolworths's bid price of A$4.00.
In a statement, Woolworths said buying Country Road would be the "logical next step" in its pursuit of David Jones because of the opportunity to save costs by combining operations across the two businesses.
David Jones' board in April urged its shareholders to accept Woolworths's offer, which trumped an October proposal by Australian rival Myer Holdings Ltd. MYR.AU -0.49% Myer Holdings Ltd. Australia: Sydney $2.04 -0.01 -0.49% June 24, 2014 5:24 pm Volume : 3.01M P/E Ratio 10.00 Market Cap $1.20 Billion Dividend Yield 8.82% Rev. per Employee $209,557 06/24/14 Woolworths Pursues Fashion Sho... 05/22/14 Australia's Spotless Makes Str... 04/29/14 Australia Gears Up For Spate O... More quote details and news » that was swiftly rebuffed. A meeting of David Jones shareholders to vote on Woolworths's bid was pushed back to next month to give Woolworths time to access the implications of Mr. Lew's share grab.
Founded in 1838 by a Welsh immigrant, David Jones claims to be the oldest department store in the world still trading under its original name.
Like other Australian retailers, it has been grappling with weak consumer confidence and competition from overseas online retailers, which succeeded in luring Australian shoppers while the nation's currency soared. The arrival on the high street of well-known foreign players such as Gap Inc. GPS +0.17% Gap Inc. U.S.: NYSE $41.86 +0.07 +0.17% June 24, 2014 12:33 pm Volume (Delayed 15m) : 1.11M P/E Ratio 15.80 Market Cap $18.42 Billion Dividend Yield 2.10% Rev. per Employee $118,197 06/24/14 Woolworths Pursues Fashion Sho... 06/18/14 Where Interns Learn How to Dre... 06/12/14 Lululemon Shares Plunge as Inv... More quote details and news » and Zara has also squeezed margins.
Woolworths—one of the biggest companies on the Johannesburg Stock Exchange—is betting that a takeover of David Jones will give it an edge over U.S. and European rivals, which have faced criticism for stocking their Australian stores with clothes that hadn't sold well during the Northern Hemisphere seasons.
Despite recent headwinds from online sales and new entrants, Australian retailers are starting to see signs of a revival in spending after Australia's central bank cut interest rates to a record-low 2.5% last year.
Write to Ross Kelly at ross.kelly@wsj.com
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