Myer and Apparel Brands merger gets overwhelming shareholder support

Myer shareholders have voted overwhelmingly in favour of a merger with Premier Investments’ Apparel Brands portfolio including Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E.
In votes received prior to the extraordinary general meeting on 23 January, 95.45% of shareholders showed themselves in favour of the deal, versus 3.82% who were openly against it. Of those who voted onsite, 96.16% voted in favour while 3.84% were against.
First officially announced in June, the two retail giants entered a binding share sale and implementation agreement in October, with Premier Investments coming together with Myer and Apparel Brands. The deal followed a strategic review into the Myer business instigated following the appointment of executive chair, Olivia Wirth.
Under the deal, Myer will issue 890.5 million new, fully paid ordinary shares in Myer to Premier upon completion in consideration for Just Group. There’s also a contribution of $82 million in cash by Premier. Prior to completion, Premier will then complete an internal corporate restructure with Just Group to bundle the sold-off brands under Apparel Brands, including Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E. Once the consideration shares are issued and the $82m is paid, existing Myer shareholders will own 48.5% of the issued capital in Myer, while Premier will receive 51.5% of issued capital in Myer.
Two of Premier’s brands have been excluded from the deal with Myer: Peter Alexander and Smiggle.
As a sweetener to existing shareholders, Myer said it would declare a fully franked dividend of $0.025 per share before completion provided all conditions to the transaction have been satisfied.
“We are delighted with the strong backing from Myer shareholders for the combination with Apparel Brands,” Wirth said. “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.
“Subject to the approval of shareholders at the Premier Investments EGM today, the combination will transform the Myer Group, creating a more resilient business with diversified earnings.
“I’m excited about the potential opportunities that open up for the business and our customers, team members and shareholders.”
Combined, the pair expect to have annual sales exceeding over $4 billion, operating gross profit of $1.652bn, and more than 17,300 employees across an ANZ store footprint of 783 stores.
As part of the deal, Myer’s executive will be augmented by new faces, including Teresa Rendo as managing director of Apparel Brands.
Myer is also keen to access a new market for its Myer One loyalty program, which represents nearly three-quarters of all sales through the register. In all, the combination is expected to generate benefits of at least $30 million earnings per annual on a run-rate basis over the short to media term and provide significant earnings per share accretion on a pro forma FY24 basis.
In its FY24 financial report, Apparel Brands reported sales of $791 million, with online sales representing about 16% of total revenue, and an EBIT of $76 million. The strongest sales generator was Just Jeans ($294m), followed by Jay Jays ($164m) and Portmans ($145m).
Wirth signalled more aspects of Myer’s strategic view are to come, and will be shared on investor day.
“Today you are voting on one of the most significant transactions in this company’s corporate history,” Wirth said at the EGM. “It will enable us to fast track our strategic priorities by leveraging the complementary strengths of both the Myer and Apparel Brands businesses. When I took role on as chair, we took on comprehensive strategic view to increase Myer’s profitability and drive sustainable earnings growth. As an outcome of preliminary phase of that review, we identified a potential opportunity of a combination with Apparel Brands. Our strategic vision is to create a leading Australian retail platform by identifying opportunities to deliver a step change in Myer’s market position, and generate substantial financial benefits.
“Given the challenging trading environment, this task is more important than ever. As shown in our trading update last week, Myer has not been immune from the cost-of-living crunch affecting the broader retail sector and other parts of the economy. It demonstrates why it’s crucial for retailers to continue to innovate, and evolve to grow and strengthen their businesses.”
According to that trading update for the 22 weeks to 28 December 2024, group comparable sales were down 0.8% with the corresponding period at $1.592 billion, while group online sales were up 2.8% and represented 22% of total sales in the period. Operating gross profit was $560 million, down $15m, while EBIT was also down $16m on to $48m over in year-on-year comparisons.