Myer proposes takeover of Premier’s apparel business, shares jump
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The news: Department store chain Myer has proposed taking over retailer Premier Investments apparel business, whose brands include Just Jeans, Jay Jays and Portmans.
The numbers: Under the proposed all-scrip deal, Myer would acquire Premier’s Apparel Brands business in exchange for the issue of new shares in Myer to Premier. It would also result in the separation of Myer from Premier, with Premier to distribute its current 31% stake in Myer to Premier shareholders. As a result, Premier shareholders would become Myer shareholders directly, whilst also retaining their existing Premier shareholding.
Premier shares were up nearly 7% to $31.94 in early trading on the ASX. Myer shares jumped nearly 18% to 76 cents each.
The context: Myer said the combination of businesses would generate substantial strategic and financial benefits including material cost and revenue synergies, expansion of Myer’s exclusive brands and private label portfolio, greater capacity to invest in the combined business and improved access to capital. The two groups have agreed to conduct reciprocal due diligence and discuss potential transaction terms.
If the deal is successful, Premier's largest shareholder Century Plaza Investments — which is the private investment vehicle of Premier chair Soloman Lew — would become Myer's largest shareholder. Lew has indicated that if the deal proceeds he would be prepared to take an active role as a non-executive director of Myer.
Myer said it was also progressing the strategic review of its business to assess its brand portfolio, store network, supply chain and cost base.
What they said: Myer chair Olivia Wirth said: “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,” she said.
The sources: ASX announcement, ASX announcement
