Myer Holdings (ASX:MYR) is combining with Apparel Brands – the brand owned by Premier Investments (ASX:PMV), whose huge stable includes Just Jeans, Jay Jays, Portman’s, Dotti, and Jacqui E – to create a “leading Australian retail platform.” The new merger is expected to bring in combined earnings of $30 million per year.
Myer entered a binding Share Sale and Implementation Agreement (SSIA) with Premier Investments Ltd to facilitate the combination of its business with Apparel Brands – an action which follows through on a report in June that the department store giant had made an approach about a potential link-up of the two businesses.
The arrangement involves Myer issuing 890.5 million new, fully paid ordinary shares in Myer to Premier upon completion in consideration for Just Group Ltd (JGL), while Premier will provide $82 million of cash.
The bringing together of these two companies will require a corporate restructure, with JGL to own Apparel Brands – that is, Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E.
Solomon Lew – the current chairman of Premier – will continue his role, but will also join the board of Myer as a non-executive director after the transaction.
A fully franked dividend of 2.5 cents per share to existing Myer shareholders has also been declared.
The deal means Premier Investments will now focus its attention on its other brands, in particular Peter Alexander and Smiggle.
Myer Executive Chair Olivia Wirth said the combination would be transformational.
“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,” she 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.”
Myer has been trading at 97 cents, while Premier has been trading at $30.88.
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