Premier Investments Limited has signed a deal to offload its Just Group business to Myer in a share sale and implementation agreement.
As part of the deal, Myer will acquire five apparel brands under the Just Group - Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E - in exchange for 890.5 million new, fully paid ordinary shares in Myer for Premier.
Premier Investment chairman Solomon Lew will join the board of Myer as a non-executive director as part of the transaction, in addition to his current role. Terry McCartney will also continue as a director of both Premier and Myer.
According to Premier, it will complete a corporate restructure “such that, at completion under the SSIA, Just Group, as part of Myer, will own the Apparel Brands business comprising Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti and $82 million cash.”
Peter Alexander and Smiggle will remain under the ownership of Premier. Premier will also continue to own its strategic stake in Breville Group Limited (“Breville”) and real property assets.
The 890.5 million shares to be issued to Premier represent 51.5 per cent of Myer’s enlarged share base.
"This is an opportunity for our team and our shareholders to play an important role in the future of the 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.
“Meanwhile, Premier’s Board will be focused on the ongoing growth and performance of Smiggle and Peter Alexander, including as they pursue local and international growth opportunities.”
Premier has agreed that it will distribute all of the new Myer shares received, and its existing Myer shareholding, in specie to eligible Premier shareholders on a pro-rata basis. Each eligible Premier shareholder will receive approximately 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).
Following completion of the merger, the Century Plaza Group will become Myer’s largest shareholder owning approximately 26.8 per cent of Myer. Century Plaza will also continue to be the largest shareholder in Premier, at approximately 40 per cent.
Myer executive chair Olivia Wirth said the combination of Myer and the five apparel brands is transformational for the department store.
“If approved by shareholders, it will create a leading retail group with more than 780 stores across Australia and New Zealand, with a large and highly engaged customer base and capital to fund future investment and growth,” Wirth said.
“Myer and Apparel Brands have highly complementary store footprints and customers who will benefit from an expanded omni-channel ecosystem that enables them to engage with the Group’s loved brands when and how they want.
“The combination will create significant opportunities to supercharge our leading MYER one loyalty program through greater reach, enriched data, enhanced cross-shop opportunities and increased personalisation to drive incremental sales growth.
“The combined business will also be well positioned to take advantage of capabilities in product development, design, sourcing and distribution to realise the full potential of Myer’s Exclusive Brands and private label portfolio and deliver improved margins for the Group.”
According to Premier, Myer has indicated that after the transaction, it will have $4 billion revenue and $152 million pre-AASB16 EBIT on a pro forma FY24 basis and a combined footprint of 783 stores.
The transaction is still subject to a number of customary conditions, according to both parties, including Myer and Premier shareholders voting in favour of the transaction, Myer and Premier each obtaining the requisite ASIC and ASX confirmations and executed ancillary agreements.
Subject to the satisfaction of these conditions, the transaction is expected to complete by early calendar 2025.
The five new brands will add to Myer’s already owned brands including Sass & Bide, Marcs and David Lawrence.
As for Premier, it will shift its focus towards Peter Alexander and Smiggle to focus on local and international growth, alongside continued investment in Breville and its located property assets.
Premier also noted it will still retain a strong cash balance. Peter Alexander’s sales have more than doubled since FY19 and the brand has identified significant growth opportunities for new and/or large formats stores as well as planned offshore market expansion.
Combined, Peter Alexander and Smiggle delivered revenue of $805 million in FY24, corresponding to $239 million EBIT in FY24 - with an EBIT margin of 30 per cent - on a pre-AASB 16 basis, and $243 million EBIT on a post-AASB 16 basis.
Premier added it will retain flexibility to pursue a demerger of Peter Alexander and/or Smiggle in the future.