Kroll Australia, which was appointed by Myer as an independent expert to assess the merits of the proposed Myer-Premier Investments deal, has termed the combination as “fair and reasonable.”

Myer reported Kroll’s assessment via a 278-page explanatory memorandum that it issued to the ASX on Tuesday as Myer shareholders have been urged to vote in favour of the deal at a meeting slated for January 23.

The proposed deal will see Myer acquire Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E from Premier Investments for more than $860m in Myer shares which will then be distributed to Premier shareholders, of which Premier Investments’ chairman Solomon Lew is the largest shareholder.

The deal is expected to result in a footprint of more than 700 stores for the combined entity. Myer currently has 56 stores, but will take on 719 Apparel Brand stores across Australia and New Zealand.

Also, Lew, will return to Myer’s board as a director, alongside him retaining his position as chairman at Premier.

The memorandum has concluded that the deal is not unfairly favourable to non-associated Myer shareholders, namely Lew and Premier Investments.

 

Myer will issue 890.5 million shares to Premier for the acquisition of the Apparel Brands business, and Premier will also Pay Myer $82m in cash. Myer shareholders (including Premier by way of its existing shareholding) will hold 48.5 per cent of issued capital in Myer, while Premier will receive 51.5 per cent of issued capital in Myer. The Myer shares will then be distributed to Premier Investments shareholders.

Following the deal, Premier Investments will cease being Myer’s largest shareholder, and instead Lew personally will emerge as Myer’s largest shareholder with a stake of around 26.8 per cent.

“The combination of Myer and Apparel Brands, which comprises much loved brands Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E, is transformational for our business,”  Myer executive chair Olivia Wirth said in her letter to shareholders accompanying the explanatory memorandum.

 

“Bringing together two highly complementary businesses, the combination of Myer and Apparel Brands creates a leading omni channel retail platform of significant scale across Australia and New Zealand with pro forma historical annual sales of more than $4bn in fiscal 2024, a large and highly engaged customer base, and a stronger balance sheet to fund future investment and growth.”

The memorandum added, “The Myer independent directors unanimously recommend that Myer shareholders vote in favour of the combination resolution, subject to the independent expert continuing to conclude that the combination is either fair and reasonable, or not fair, but reasonable to non associated Myer shareholders.”

The independent expert’s assessment comes following leaked internal documents which showed that some of Premier Investments’ brands were missing sales targets and performing below projections.

However, Myer’s latest assessment of the deal is expected to allay any hesitation that shareholders might have in voting in favour of the deal.

Lew, at Premier Investments’ AGM last week, also made a case for the deal, noting, “The combination of Myer and the Apparel Brands will deliver enhanced scale to the combined group, more opportunities through loyalty, and extract growth throughout the design, sourcing and distribution process.”