Myer has sealed “one of the most significant” deals in the department store’s 124-year history to acquire the clothing division of Premier Investments.
As part of the deal, Apparel Brands — which is made up of Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E — will move under Myer, giving the retail giant a footprint of more than 780 stores across Australia and New Zealand.
Myer first approached Premier about the deal last June, before the companies struck a deal in October that would see Premier retain ownership of its Smiggle stationery brand and sleepwear label Peter Alexander.
Shareholders for both Myer and Premier Investments were required to approve the deal, with both holding meetings for investors in Melbourne on Thursday morning.
However, proxy votes from Myer and Premier shareholders — cast before the formal meeting — showed the majority of investors had already approved the deal.
Ninety-five per cent of Myer shareholders had voting in favour of the merger, while 99.8 per cent of Premier’s shareholders approved the move.
At the start of the meeting, Myer chair and chief executive Olivia Worth said the merger was “compelling and in the best interests of Myer shareholders”.
“Today you are voting on one of the most important transactions in the corporation’s history,” she told shareholders.
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Ms Wirth said it was crucial for retailers to innovate to grow their business, and acknowledged that Myer has “not been immune” from the higher cost of living affecting shoppers and the retail sector.
“That, in essence, is what today is about — adapting our business to ensure it is best placed to thrive in the years ahead in a highly competitive and rapidly evolving retail market,” she said.
“The combination of Myer and Apparel Brands … brings together two businesses that are highly complementary.”
Ms Wirth said the combined group would create a “leading retail platform” in Australia and New Zealand, which recorded more than $4 billion worth of sales in the last financial year.
The deal does not require regulatory approvals and will be completed by January 26, before the brands officially join the Myer stable on January 27.
Myer shareholders attended the meeting in Melbourne on Thursday morning. (ABC News: Emilia Terzon)
‘B-grade brands at best’?
Although the meetings were a formality to the deal being approved, Myer shareholders took the opportunity to question the department store’s board about the move.
Activist shareholder David Kingston expressed cynicism for the merger, referring to Premier’s fashion chains as “B-grade brands at best”.
“It might be a short-term sugar fix, but personally I have my doubts if it will work in the medium term,” he told the meeting.
His comments reflected broader shareholder dissatisfaction with Myer’s performance on the Australian Securities Exchange, which has been declining for several years, and fell sharply this month after issuing a disappointing trading update.
Myer’s share price has struggled for years on the ASX. (AAP: Joel Carrett)
After the meeting, Ms Wirth said shareholders were allowed to have their own point of view, but reiterated that the deal had been carefully thought through.
“Everyone has, and can have, their own point of view, but I also know the reality, and this is from extensive consumer research that we’ve done,” she told the ABC.
“We know what the customers think of a Dotti brand or a Just Jeans brand.
“You’ve got to remember that these brands attract a very, very broad range of customers, Jay Jays at the youngest and Jacqui E at the oldest, and the research shows these are well-loved brands across Australia, and we intend to invest in them.”
However, Ms Wirth said it was too early to say whether its new brands would appear in Myer stores.
“Where there’s an opportunity to bring a brand into the Myer store, we’ll absolutely be assessing that, but for the moment, it’s business as usual [and] we’ll continue to offer that great experience in the specialty stores,” she said.
Lew’s years-long pursuit of Myer
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The tie up of Myer and Premier Investments has been years in the making, following a long pursuit by billionaire investor Solomon Lew, who has provided his critique of Myer management along the way.
Mr Lew, Premier’s chairman, will rejoin Myer’s board as part of the deal, after his previous tenure on the Coles Myer board two decades ago.
Premier was already the biggest shareholder in Myer, owning nearly a third of the company.
Speaking after the Premier shareholders meeting on Thursday, Mr Lew said he was “feeling very happy” about the two companies joining forces.
“It’s an incredible vote. When I was told about the result, I said ‘did you go back and check it again?’ because I don’t think I’ve ever seen a vote that’s just a smidgen under 100 per cent,” he told the ABC.
Solomon Lew is now the largest shareholder of Myer thanks to the Premier deal. (ABC News: Emilia Terzon)
But the retail veteran — who shared that he was wearing socks from Myer — acknowledged that the merger would not be without its challenges due to the broader pressures facing the retail sector and consumers.
“We understand how difficult it is, and obviously a lot of companies are finding it very, very difficult,” Mr Lew said.
“There’s a big challenge there now, but there’s big opportunity, and that’s what we see … by the merging of these two companies, and there’ll be a real benefit.”
Asked what was behind his long-running affinity for Myer in the years after he left the company, Mr Lew said he wanted to see the department store giant thrive again.
“Myer is a business that hasn’t gone well for quite a few decades,” he said.
“When I was there as chairman, Myer was doing a lot better than what it has done in the last couple of decades.
“There’s always decisions that have to be made, but they’ll be more about trading and opportunities and upskilling the business.
“At the moment … it’s business as usual.”
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