Australian department store Myer has approached Premier Investments Limited to explore a potential combination with its Apparel Brands business.
The deal is subject to ASX, ACCC and Australian Taxation Office engagement, with the combination of Myer and Premier’s Apparel Brands business being via an all-scrip merger. In effect, Myer would acquire Premier’s Apparel Brands business - which includes Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E - in exchange for the issue of new shares in Myer to Premier.
Premier added that “sufficient” cash will also be contributed alongside Apparel Brands.
Myer has indicated that it expects Century Plaza Investments Pty Ltd and its Associates would be represented on the board of Myer if the proposal proceeds. Century Plaza has advised Premier that it will propose that chairman Solomon Lew join the board of Myer as a non-executive director in that case.
Lew has indicated that he would also be prepared to take an active role as a non-executive director of Myer if the transaction proceeds given his extensive retail experience, that Century Plaza would become Myer’s largest shareholder and that Century Plaza’s interests would be aligned with other Myer shareholders.
The deal will also involve the separation of Myer from Premier. Premier would distribute all of its shares in Myer to Premier shareholders. As a result, Premier would cease to own shares in Myer.
After the proposed transaction, Premier shareholders would become Myer shareholders directly, whilst also retaining their existing Premier shareholding.
Apparel Brands has a retail network of 717 stores across Australia and New Zealand, generating revenues of $845 million in FY23.
Myer identified opportunities from a combination of the businesses to deliver a step-change in Myer’s market position and generate substantial strategic and financial benefits.
These include scale, revenue and growth opportunities, cost and revenue synergies across supply chain, sourcing, property and brand management, and the leveraging of Myer’s loyalty program and e-commerce platform across an enlarged customer base.
It will also add to the expansion of Myer’s exclusive brands and private label portfolio.
In line with this approach, Myer has decided to retain ownership of its current brand portfolio, which includes iconic brands Sass & Bide, Marcs and David Lawrence.
An Independent Board Committee, led by Myer executive chair Olivia Wirth, including all of Myer’s independent non-executive directors except Premier’s nominee director, has been formed to consider the proposed combination with Apparel Brands.
“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,” Wirth said.
“While Myer has one of Australia’s strongest retail brands, store networks and loyalty programs, 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.”