Aims to Create a Leading Retail Platform Across Australia and New Zealand
HIGHLIGHTS
- Binding Agreement: Myer has entered into a binding agreement with Premier Investments to combine with Apparel Brands, which includes popular brands such as Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E.
- Strategic Growth: The combination is set to accelerate Myer’s strategic priorities, expanding its retail footprint and driving growth.
- Scale and Efficiency: The transaction will create a larger platform, providing the opportunity for greater operating leverage, increased scale, and enhanced investment in growth.
- Financial Benefits: The deal is expected to deliver at least $30 million in earnings annually and provide significant EPS accretion on a pro-forma FY24 basis.
- Completion Timeline: The transaction is expected to complete in early 2025, subject to shareholder approval and customary conditions.
Transaction Details
Under the Share Sale and Implementation Agreement (SSIA), Myer will issue 890.5 million new shares to Premier in exchange for the Apparel Brands portfolio and an $82 million cash contribution.
- Post-Transaction Ownership:
- Premier will own 51.5% of Myer.
- Existing Myer shareholders will own 48.5% and receive a fully franked dividend of 2.5 cents per share (valued at $20.9 million).
- Premier will distribute all its Myer shares to its shareholders, making them direct Myer stakeholders.
- Leadership Changes:
- Premier’s largest shareholder, Century Plaza Group (led by Chairman Solomon Lew), will become Myer’s largest shareholder with a 26.8% stake.
- Myer’s Executive Chair, Olivia Wirth, will remain in leadership, with Teresa Rendo from Apparel Brands joining the executive team.
- Solomon Lew is expected to join Myer’s Board as a non-executive director.
Strategic and Financial Rationale
The combination is expected to unlock significant value for Myer by:
- Enhanced Scale: Bringing together Myer and Apparel Brands will create a more robust platform with increased scale, allowing Myer to extract growth and benefit from operating leverage.
- Omni-channel Synergies: The integration will leverage Myer’s MYER one loyalty program and eCommerce platform, driving cross-shopping opportunities and enhancing customer engagement.
- Customer Base Expansion: Apparel Brands’ strong, complementary customer base will help drive cross-shop benefits and strengthen brand offerings.
- Private Label Growth: The deal expands Myer’s exclusive and private label portfolio, enhancing brand management and sourcing capabilities.
- Financial Impact: The transaction is expected to generate at least $30 million in earnings per annum over the short to medium term and result in significant EPS accretion on a pro forma FY24 basis.
Executive Chair’s Comments
Olivia Wirth, Myer’s Executive Chair, highlighted the transformational nature of the transaction:
- Expanded Footprint: The combination will create a leading retail group with over 780 stores across Australia and New Zealand, offering a more diversified platform.
- Capital for Growth: The larger combined entity will have greater capacity to invest in future growth and innovation.
- Customer Experience: Myer’s MYER one loyalty program will benefit from increased reach and personalization, driving incremental sales growth.
- Improved Margins: The transaction also allows for greater efficiencies in product development, design, sourcing, and distribution, boosting Myer’s private label and exclusive brand margins.
This combination sets the stage for a stronger, more dynamic retail group poised for continued growth in the Australian and New Zealand markets.
