BT Investment Management's head of equities, Crispin Murray, said Woolworths had offered a ''reasonable'' premium and welcomed the all-cash nature of the bid, saying it was less risky for shareholders than Myer's all-scrip offer, which has been withdrawn.

But Mr Murray said counter bids from other international retailers looking to expand in Australia ''could not be ruled out''. ''Now everyone knows David Jones is in play and the price the board is willing to accept; there is information there that wasn't there before,'' he said.

''So now they know, at least, if they can make it work in terms of the numbers, there's a responsive audience.''

Mr Murray said Woolworths' offer highlighted the importance of boards disclosing takeover approaches. ''Having the information out there that Myer was interested in a merger has probably played a role in Woolworths making a decision and if you hadn't had that information they may have sat back and waited,'' he said.

The DJs board came under fire earlier this year for failing to disclose a $1.5 billion merger of equals proposal from Myer until details of the offer leaked three months later.

Woolworths chief executive Ian Moir revealed on Wednesday the South African retailer had been eyeing David Jones for a year but decided to make a move once it learnt of the Myer bid in late January. Woolworths approached the David Jones board mid-March and secured a unanimous recommendation on Tuesday night.

But the response from Woolworths' own shareholders has been less enthusiastic. While David Jones shares rose 23 per cent on Wednesday, Woolworths shares fell 7.6 per cent in South Africa, posting their biggest loss since March 2009.

''There were some sceptical questions on the conference call, mainly around the fact they [investors] are not that familiar with the industry here,'' Pengana Capital fund manager Rhett Kessler said.

''It's a big bet for Woolworths - they have bet half the market cap of the company.''

Mr Kessler described Woolworths' offer as ''bloody marvellous'' but agreed counter bids could emerge and shareholders should keep their options open.

''If a smart company like Woolworths thinks it's a good idea they can make money out of, it's not impossible that others may also think they can,'' he said.

Another big shareholder, who declined to be named, questioned whether Myer, which has withdrawn its original merger of equals proposal, could come back with a revised offer or team up with another bidder.

''I'm sitting tight - more could happen,'' the fund manager said.

DJs chairman Gordon Cairns said Woolworths' offer was compelling and provided shareholders with certainty. However, he was aware that overseas department stores such as John Lewis and Marks & Spencer were looking at the Australian market and the board would consider superior offers if they emerged.