Premier Investments holds gains as Peter Alexander, Smiggle figures impress analysts
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More news: Shares in Premier Investments held a 10% jump on the ASX after the clothing chain owner announced the sale of its apparel brands arm to Myer.
Premier shares were up 10.61% to $34.16 by 2:30pm AEDT while Myer was down 1.55% to 96 cents.
As part of the transaction document, Premier released earnings figures for Just Group for the first time, as well as for its remaining retail brands Peter Alexander and Smiggle.
Peter Alexander and Smiggle recorded FY24 EBIT margins 30% higher than Citi's estimates and earnings "much higher" than E&P Capital forecasts.
Meanwhile, Myer shares lowered after initially gaining in morning trade. E&P analyst Kade Madigan said the earnings figures for apparel brands are "much lower" than anticipated.
However, based on an estimated $30 million of synergies with the newly acquired businesses, E&P estimates Myer will see an earnings per share uplift of around 28%.
Myer and Premier Investments soar on Just Group deal
More news: Shares in Myer and Premier Investments both climbed in morning trade after Myer agreed to acquire Premier's apparel brands business in Australia and New Zealand.
Myer shares were up 5.4% to $1.02 by 10:40am AEDT while Premier Investments rocketed 17.6% to $36.33.
Myer acquires Premier Investments' Apparel Brands
The news: Department store chain Myer will acquire Premier Investments' apparel brands business in Australia and New Zealand, comprising Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E, in exchange for the new issue of new shares in Myer to Premier.
The numbers: Myer has agreed to buy Just Group, which will consist of the five apparel brands, in exchange for 890.5 million new shares in Myer. Premier will complete a corporate restructure which will see Just Group, as part of Myer, own the five brands and $82 million cash.
The 890.5 million shares to be issued to Premier represent 51.5% of Myer’s enlarged share base. Premier has agreed that it will distribute all of the new Myer shares received, as well as its existing Myer shareholding, with each eligible Premier shareholder receiving around 7.2 Myer shares per Premier share.
Following this distribution, Premier will no longer own any shares in Myer, as Premier shareholders would become Myer shareholders directly whilst also retaining their existing Premier shareholding.
As a result, Century Plaza Group will become Myer’s largest shareholder, owning approximately 26.8% of Myer. Century Plaza will also continue to be the largest shareholder in Premier with a 40% stake.
Myer said that its acquisition of apparel brands is expected to generate combination benefits of at least $30 million in earnings on a run-rate basis over the short- to medium-term across a range of areas.
The context: As part of the transaction, which was proposed earlier this year, Premier chair Solomon Lew will join Myer’s board. Terry McCartney will also continue as a director of both Premier and Myer.
Premier will continue to own retail businesses Peter Alexander and Smiggle and a strategic investment in Breville, as well as property assets.
Myer and Premier are working to complete the acquisition in early 2025.
What they said: "This is an opportunity for our team and our shareholders to play an important role in the future of Australian and New Zealand retail landscape," Lew said.
"Myer and our Apparel Brands will be stronger together — delivering vertical integration, scale, additional margins and loyalty opportunities."
The sources: ASX announcement, Citi research, E&P Capital research
