Woolworths‚ headed by Ian Moir‚ is set to buy David Jones‚ Australia's oldest chain of department stores for R23.3bn.
Lew has‚ for almost two decades‚ been at loggerheads with Woolworths as he clings to an 11.8% holding in Country Road‚ rendering the Cape Town-based group just 2% short of the threshold needed to take out the remainder and delist its Country Road unit from the Australian Stock Exchange. Support has largely swayed in favour of the David Jones tie-up‚ synergies of which are expected to be at least R1.4bn (a conservative estimate‚ some analysts say) a year in earnings within five years.
Through his private company SL Nominees‚ Lew purchased 3.5-million shares - about 0.65% - in the retailer‚ according to a David Jones regulatory statement.
Although his motives are unclear‚ Lew would need at least 10% to block a shareholder vote and possibly derail the takeover. It has emerged that Deutsche Bank holds a 6.7% stake in David Jones on behalf of an unknown client‚ leaving insiders scrambling to ascertain if they are indeed owned by Lew.
A retail consultant from Sydney-based Impact Retailing‚ Stuart Bennie‚ said Lew had gone to extraordinary lengths to cover his tracks and that there was speculation regarding the purchase of his "tiny" stake.
"One theory is that he will make A$175‚000 if/when the sale goes through. This is an unlikely - he's a billionaire and wouldn't get out of bed for a mere A$175k."
Bennie said Lew could not block the sale with such a small share. "In my view he has an ulterior motive but just what it is‚ is hard to fathom. Of course he has been locked in battle with Woolies ... My personal view is that he wants to be a thorn in Woolies' side and that he may be looking at some kind of trade-off‚" he said.
Lew‚ a former Reserve Bank of Australia board member‚ is chairman of Premier Investments which runs chains such as Dotti‚ Peter Alexander and Smiggle. With no debt‚ the company sits with more than A$300m on its balance sheet.
Lew had employed "disgraced but hugely respected" Mark McInnes to run Premier‚ said a retail consultant at New South Wales-based Retail Oasis‚ Stephen Kulmar.
"Mark has collected around him the core of David Jones 's successful old management ... clearly a resource that's overskilled to just run the Premier Brands‚" he said.
Lew was voted off the board of Australia's largest retailer Coles Myer in 2002.
"Solly has ached for respect since being dismissed from the board of Coles Myer about 12 years ago. Plus he is the type of investor operator who acts emotionally as much as he does rationally‚" said Kulmar‚ who thinks Lew and McInnes might try to scupper the merger.
"I suspect Mark and his team would be disappointed to not take a run at the acquisition and try to disrupt the merger.... I believe they were preparing to make a bid‚ but they got the timing wrong‚ and now they are doing their best to secure a seat at the table‚" Kulmar said. David Jones' shareholders vote on 30 June.
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