Obscure broker active in DJs before bizarre bid
July 4, 2012 - 3:16PM Read later
Dummy bid or not, traders were busy. Photo: Glenn Hunt
The mystery surrounding the bizarre $1.65 billion takeover move on upmarket retailer David Jones has extended to a discount stockbroker in Melbourne, which on the day before the takeover approach, dominated trading in the retailer's shares.
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BusinessDay can reveal that ITG Australia, stockbroker code 345, accounted for a large portion of trading in David Jones shares last Thursday, and was a net buyer of 700,000 shares in the retailer in transactions worth nearly $2.15 million.
According to data given to BusinessDay, ITG Australia bought 950,000 shares in David Jones on the Thursday and sold 250,000 shares - implying more than half the trade in the stock.
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On that day, just over 2.3 million David Jones shares changed hands, according to Bloomberg data.
A day later, when the retailer declared to the market it had received a $1.65 billion takeover approach, stock turnover soared more than 10-fold. Its share price rose almost 20 per cent at one point in the day.
Brokers contacted by BusinessDay said ITG Australia has a low profile among professional traders in Australia. ITG has its headquarters in New York.
Already by Friday, the identity of the bidder was named as a little-known British firm EB Private Equity. By Monday, EB Private Equity had decided to drop its bid, sending David Jones skidding and prompting widespread debate about whether there was ever a credible offer that the retailer should have revealed to the market.
The corporate regulator, the Australian Securities and Investments Commission, said yesterday that it will examine the share trades of David Jones.
According to information contained on IRESS, a trading tool used by stockbrokers, ITG paid an average of $2.27 per David Jones share, slightly more than the stock's closing price of $2.26.
On Friday, the retailer's shares rose as high as $2.69 and closed at $2.59. They retreated more than 10 per cent to $2.33 on Monday after the bid was pulled.
The value of the total buys on Thursday put in by ITG Australia's clients amounted to $1.6 million for the day.
It is unusual for smaller brokers to dominate trading in large blue-chip companies such as David Jones with even CommSec - owned by Commonwealth Bank and one of the most popular brokers in Australia - typically swamped by bigger broking houses such as Citi or UBS.
Citi and UBS together accounted for 59 per cent of Friday's trade in David Jones stock. ITG were not a major trader on that day.
There is no suggestion ITG Australia was involved in the takeover approach for David Jones or has done anything that would breach disclosure or corporate regulations.
BusinessDay contacted ITG Australia's local headquarters in Melbourne but a receptionist said all inquiries needed to be forwarded to its office in Hong Kong.
The true identity of EB Private Equity's owners and directors remains unknown. A man claiming to be the chairman of the private equity firm, John Edgar, also remains in hiding.