What: Australian department store Myer has proposed to explore a merger with an apparel brands group.

Why it is important: Beware of what could come out of such an idea, Stockmann in Finland has done so and is now overwhelmed with the success of Lindex, which gave its name to the holding company.

Myer has initiated a proposal to merge with Premier Investments' Apparel Brands, which includes Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti. This proposed all-scrip merger, outlined as non-binding, indicative, and conditional, would involve Myer acquiring these brands in exchange for issuing new shares to Premier. As a result, Century Plaza Investments, led by Premier chairman Solomon Lew, would become the largest shareholder in Premier.

The merger aims to enhance Myer's scale and market position significantly, promising substantial synergies and potential for sustainable earnings growth. According to Myer executive chairwoman Olivia Wirth, the merger aligns with Myer’s strategic focus on both organic and inorganic growth to maximize shareholder value. She noted that the potential synergies and growth prospects of this combination merited further exploration.

Apparel Brands operates 717 stores across Australia and New Zealand and reported revenues of USD 845 million in the last fiscal year. Both companies have recognized the substantial benefits this merger could offer and have agreed to proceed with reciprocal due diligence to explore the transaction further.

Myer seeks to merge with Premier Investments’ Apparel Brands