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Published 15 August 2012 05:56, Updated 16 August 2012 14:50
Solomon Lew’s decision to fight Country Road’s $172 million acquisition of Witchery demonstrates an approach to investing frequently favoured by the rich: make decisions about your own investments on your own terms.
Lew is owner of Australian Retail Investment, which has an 11.8 per cent stake in clothing chain Country Road. Most shares (87.9 per cent) are owned by South African company Woolworths, which is unrelated to the Australian-based company with the same name.
Lew and Woolworths have had an uncomfortable relationship for many years. Retail royalty in Australia, Lew has been happy to criticise Country Road’s management and its majority owners when they fail to meet his expectations.
Like many retailers, Country Road is finding conditions difficult; sales from its Australian business were down 6.6 per cent last financial year.
Nevertheless, Country Road is attempting to buy rival retailer Witchery, a business formerly owned by Lew.
Gresham Private Equity is the current owner and Lew has been reluctant to support a rights issue to help fund the purchase.
Having kept Country Road management waiting for about a week, Lew’s team told them it needed more information about the sale before it was willing to support it. Not satisfied by the subsequent response, Lew has flagged legal action.
Country Road says Lew’s claims are baseless but getting a court to agree will take time and money. Like most members of the Rich 200, Lew has plenty of both. Expect him to hold his ground until he is sure that the deal suits him.