Veteran Australian retailer Solomon Lew has realised his ambition to return to a seat of power at department store operator Myer Holdings after a merger with his 40%-owned retail investment group Premier Investments was approved today.
The companies’ shareholders gave their ascent to the “combination” under which Premier shareholders take a combined 51.5% stake in Myer in return for selling the Apparel Brands business.
The $837 million deal was given the green light at meetings in which more than 96% of the votes cast at the Myer meeting and more than 99% of the votes cast at the Premier meeting were in favour of the resolutions.
Like US Army General Douglas MacArthur who vowed to return after escaping the Philippines in 1942, Lew will return to the Myer board and become the largest shareholder with a 26.8% stake after the 890.5 million new shares Premier is receiving and its existing 26% Myer stake are distributed to Premier shareholders.
Executive Chair Olivia Wirth said Myer was delighted with the strong backing from shareholders for the combination with Premier’s Just Jeans, Jay Jays, Portmans, Dotti and Jacqui brands.
“Our shareholders have demonstrated their overwhelming support for the combination with Apparel Brands and our strategy to create a leading retail platform across Australia and New Zealand,” Worth said in an ASX announcement.
Worth said the combined business would have annual sales of more than $4 billion in FY24, 783 department and specialty stores and more than 17,000 team members.
Earlier Myer told the meeting it was one of the most significant transactions in Myer’s 124 year history and would:
- create a business with significantly enhanced scale and capabilities to drive growth and operating leverage benefits
- introduce new customers to Myer’s loyalty program
- generate pre-tax annual earnings benefits of least $30 million in the short to medium term
- boost the balance sheet by providing greater capacity to invest in growth
- produce opportunities to use the apparel brands’ capabilities in product development, design, sourcing and distribution to deliver improved margins, and
- expand and diversify Myer’s shareholder base, with improved share trading liquidity and access to capital.
Lew chaired Coles Myer from 1991 to 1995 and was voted off its board in 2001, five years before Myer was sold to private equity, but he returned as a shareholder after Myer was floated on the ASX in 2009, agitating for changes which culminated in this deal.
At 2:25 pm AEDT (3:25 pm GMT), Myer (ASX: MYR) shares were trading at 94 cents, up four cents (4.2%) on the prior day, after trading between 91 and 96 cents, and capitalising the company at $791.49 million.
Premier Investment (ASX: PMV) shares were down 42 cents or 1.55% at the day’s low of $26.63, after ranging between $26.08 and $27.08, and capitalising the company at $4.25 billion.
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