Woolworths outlines DJs costs

SOUTH Africa’s Woolworths will pay its advisers a total of $37 million in fees for their help in securing the acquisition of David Jones, a deal Woolworths says will cost it $2.35 billion.

Woolworths says it is paying Rothschild $11m for its merger and financial advisory work. Standard Bank of South Africa will get $8m for advice and transaction sponsorship. Funders’ legal fees and consultancy fees will cost $15.3m.

It says it will pay its South African legal counsel Webber Wentzel $1.2m and Australian law firm Gilbert + Tobin about $584,000. Payments to accountants Ernst & Young, public relations firms and printers’ fees would make up the balance of the costs, the retailer said in its scheme booklet released to South African shareholders yesterday.

Woolworths says the total estimated transaction costs, including financing and related costs, of the David Jones acquisition are $97.8m. It will refinance David Jones’ net debt in a transaction that will cost $100m. It also received approval from the South African Reserve Bank for the takeover.

The Cape Town-based company is funding the deal through a combination of cash and debt. It will draw $1bn from cash reserves and debt facilities and will use $400m from an Australian debt facility. It has equity bridge funding of $941.4m.

The $2.35bn cost of the David Jones acquisition is more than the total cash consideration of the takeover of $2.15bn.

Woolworths says the acquisition creates a southern hemisphere department store operator with 1151 stores in 16 countries.