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Highlights
- Solomon Lew finds no red flags in Myer merger talks.
- Premier’s brands earn 20 cents per dollar, Myer just 1.5 cents, indicating strong merger potential.
- Smiggle demerger delayed to prioritize Myer merger discussions.
Retail magnate Solomon Lew, executive chairman of Premier Investments (ASX:PMV), has provided an optimistic update regarding the ongoing merger discussions with department store chain Myer (ASX:MYR). In a recent statement, Lew asserted that, as of now, there are no "red flags" emerging from the due diligence process associated with this potential merger.
Lew emphasized that while the due diligence is still ongoing, the preliminary findings have not raised any concerns. He noted, "At this point in time, we haven’t seen any red flags, but we’re not through the due diligence." His remarks suggest a cautious but positive outlook on the merger, highlighting the synergy that could be achieved between Premier Investments' diverse apparel brands and Myer’s retail presence.
Premier Investments operates a variety of well-known clothing brands, including Just Jeans, Jay Jays, Jacqui E, Portmans, Dotti, as well as the popular chains Peter Alexander and Smiggle. Lew pointed out that Premier Investments currently earns approximately 20 cents for every dollar in revenue, in stark contrast to Myer, which has reported earnings of just 1.5 cents per dollar. This significant difference indicates the potential for substantial growth should the merger be executed effectively.
He expressed confidence that, with the right structural approach, there could be considerable upside to the merger. “There should be, with the right structure, some very big upside,” Lew stated, indicating that a well-planned integration could lead to improved profitability and market position for both entities.
In the context of the merger discussions, Premier Investments has decided to delay its planned demerger of the Smiggle brand from its original timeline of January. However, Lew clarified that this plan has not been entirely abandoned but rather postponed to accommodate the ongoing merger talks. "We’re still on it,” he affirmed, suggesting that the demerger remains a priority for the company, albeit secondary to the potential merger with Myer.
Additionally, the demerger of Peter Alexander is also under consideration, though it has taken a "back seat" as discussions with Myer continue to progress. Lew noted, “Every day there are meetings,” reinforcing the active engagement in exploring the merger's viability.
As the retail landscape continues to evolve, the proposed merger between Premier Investments and Myer represents a strategic opportunity for both parties. By combining resources and expertise, they may create a more competitive offering in the Australian retail market, potentially revitalizing Myer while enhancing Premier's brand portfolio. The ongoing due diligence will be critical in determining the feasibility and structure of this significant merger, with Lew’s insights indicating a promising outlook for collaboration in the retail sector.
