Myer to acquire Just Jeans, Jay Jays and Portmans in quasi-merger with Premier Investments

Department store group Myer Holdings (ASX: MYR) is poised to create a $4 billion-a-year retail giant through the acquisition of Premier Investments’ (ASX: PMV) Apparel Brands division which will bring Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti into its fold.

The scrip-based quasi-merger will also give Premier Investments shareholders control of more than half of Myer’s shares, as well as their existing interest in Premier Investments which plans to then focus on growing its highly profitable luxury sleepwear chain Peter Alexander and stationery business Smiggle both domestically and internationally.

Premier already owns about 31 per cent of Myer and under the agreement previously flagged by the companies, Myer will issue Premier shareholders a total of 890.5 million Myer shares. This will comprise 51.5 per cent of the enlarged Myer share base, with the shares to be issued at the rate of 7.2 shares for every share in Premier Investments held.

The distribution of Myer shares to Premier shareholders will be made via a combination of “in specie capital return” and “in specie dividend”, which will be either fully or partially franked.

Following the deal, Myer will own the Just Jeans Group, which currently controls the Apparel Brands portfolio, while also receiving $82 million cash as part of the deal.

Once the acquisition is settled, Premier will no longer hold an investment in Myer shares as Premier shareholders will effectively become direct Myer shareholders in addition to their existing investment in Premier.

"This is an opportunity for our team and our shareholders to play an important role in the future of the Australian and New Zealand retail landscape,” says Premier’s chairman Solomon Lew who will join the Myer board following the transaction.

“Myer and our Apparel Brands will be stronger together – delivering vertical integration, scale, additional margins and loyalty opportunities.

“Meanwhile, Premier’s Board will be focused on the ongoing growth and performance of Smiggle and Peter Alexander, including as they pursue local and international growth opportunities.”

Myer says the expanded retail operations will create a business that delivers more than $4 billion in annual revenue from 783 stores with estimated earnings before interest and tax (EBIT) of $250 million on a pro forma FY24 basis. Myer reported $3.26 billion in sales in FY24 and EBIT of $162.7 million.

Myer’s staff base will grow from 11,800 to 17,300 following the deal, while the group has also identified savings of about $30 million a year from the combined operations.

“The combination of Myer and Apparel Brands is transformational for our business,” says Myer’s executive chair Olivia Worth.

“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.

“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.”

Worth says the merged group will deliver “significant opportunities to supercharge” the MYER one loyalty program through an extended reach as the Apparel Brands portfolio comprises the bulk of its expanded store network with a footprint of 719 stores.

“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,” she says.

Th acquisition still has to be put to a separate vote by Myer and Premier shareholders. The Myer board has unanimously recommended the deal pending a report on the transaction by an independent expert.

Premier says that following the sale it will continue to have a “very strong cash balance”.

“Peter Alexander’s sales have more than doubled since FY19 and the brand has identified significant growth opportunities for new and/or large formats stores as well as planned offshore market expansion,” says the company.

“The brand has recently opened a new expanded flagship store in Chadstone and is scheduled to open three stores and a dedicated website in the United Kingdom in November 2024.”

Combined with Smiggle, which has 309 stores in Australia, New Zealand, Singapore, Malaysia, United Kingdom and the Republic of Ireland, the two businesses delivered revenue of $805 million in FY24, delivering EBIT of $239 million.

Myer and Premier Investments are anticipating the acquisition will be completed in early 2025.