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Myer’s Shares Climb Over 17% on Premier Deal

Shares of Myer Holdings soared on Monday following Solomon Lew’s Premier Investments confirming that it had received a proposal for a potential merger of Myer and Premier’s Apparel Brands.

Since the start of trade on Monday, shares of Myer were already up around 17 per cent to A$0.76 as of 1.10pm AEST, while Premier Investments’ share was also up 4.28 per cent to A$31.22.

Lew who has a 31 per cent stake in Myer has for years has been inching towards acquiring a controlling stake in Myer by gradually increasing his share of the upscale department store chain.

New Myer boss Olivia Wirth, just three months after taking the chair’s seat, has launched a bold plan to finally deliver the department store to Lew.

The deal, effectively a reverse takeover of Myer, marks the ultimate win for Lew who backed the appointment of Wirth.

Under the latest deal the details of which emerged on Monday, the combination of Myer with Premier’s Apparel Brands business is proposed via an all-scrip merger – in effect, Myer would acquire Premier’s Apparel Brands business in exchange for the issue of new shares in Myer to Premier.

Under the proposal, Myer would therefore acquire the Apparel Brands business which operates 717 stores nationally across the Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti brands.

The deal would involve Myer issuing shares to Premier, valuing Apparel Brands on an earnings multiple. The indicative valuation of Apparel Brands, which generated more than A$845 million in revenue in FY23, has not been released by Myer.

Premier would then distribute those Myer shares to its shareholders, and Premier would cease to own shares in Myer.

Lew’s private investment vehicle Century Plaza Investments, which is Myer’s largest shareholder with a 31 per cent stake, would become Myer’s largest shareholder, although with a shareholding less than Premier’s current holding.

“If the proposed combination proceeds, it is expected that Century Plaza would be represented on the board of Myer,’’ Myer told the ASX.

“Century Plaza has advised Premier that it will propose that Mr Solomon Lew join the Board of Myer as a non-executive director in that case,” added Premier Investments in its statement to the ASX.

Myer would retain its currently owned sass & bide, Marcs and David Lawrence brands, which had previously been contemplated for sale under the strategic review initiated by new executive chair Olivia Wirth, reported The Australian.

As next steps, Premier and Myer have agreed to conduct reciprocal due diligence and discuss potential transaction terms.

“Against the backdrop of a changing retail landscape, Myer has commenced a thorough review of its strategic direction and growth opportunities, focused on increasing profitability, improving returns and driving sustainable earnings growth for our shareholders,” said Wirth.

“While Myer has one of Australia’s strongest retail brands, store networks and loyalty programmes, there is a significant opportunity to reinvest in our product offering, customer engagement capabilities and further optimise our supply chain to achieve our full potential. As part of this review, Myer is exploring both organic and inorganic investment opportunities that align with our strategic focus areas to create value for Myer shareholders. It quickly became clear that the idea of a combination of Myer and Apparel Brands offered significant potential synergies and prospects for growth, evidently warranting further examination,” added Wirth.

Premier too told the ASX it saw potential merit in the proposal. “Premier also believes that there may be meaningful opportunity for both businesses from the proposal. The proposed combination has the potential to deliver a step change in Myer’s scale and market position, deliver synergies and drive sustainable earnings growth. Premier shareholders would benefit given Premier’s existing shareholding in Myer and because Premier shareholders would become shareholders in Myer.”

While Barrenjoey Capital Partners and Clayton Utz are advising Myer, UBS and Arnold Bloch Liebler are doing the same for Premier.

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