Australian department store owner Myer will buy retail billionaire Solomon Lew‘s Premier Investments‘ apparel brands business, in a deal valued at A$863.8 million ($568.38 million), the companies said on Tuesday.
Myer will issue Premier 890.5 million new shares in the retailer and there will be an A$82 million cash contribution by Premier to Myer as part of the transaction.
Lew’s Century Plaza Investments will emerge as the top shareholder in Myer, with a 26.8% stake, and Lew will join the board.
Myer will acquire Premier’s Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti brands.
The 890.5 million shares to be issued to Premier represent 51.5% of Myer’s enlarged share base.
The deal is the latest step in a long-running battle between Lew and Myer that began when Premier started buying the department store’s shares in 2017. Lew has been a fierce critic of Myer and its previous board and management team, who he blamed for the retail chain’s underperformance.
Lew was previously the chairman of Coles Myer almost three decades ago when the department store chain and grocery giant Coles Group were a merged entity.
As part of the deal, Premier will distribute all of the new Myer shares received to its eligible shareholders on a pro-rata basis. Each Premier shareholder will receive about 7.2 Myer shares per Premier share, the company said.
Premier shares rose 13% in early trading on Tuesday, while Myer shares were up 3.3%.
“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,” Lew said in a statement.
Premier has been working to unlock higher value for its shareholders with a potential split of the firm into four Australian-listed entities.
Myer has faced difficult trading amid a pullback in retail and discretionary spending in Australia, with sales falling 2.9% to A$3.3 billion in the year to July 27 and profit plunging 26%.
Its chair, Olivia Wirth, will continue to be the firm’s boss after the deal.
Myer said in June it had approached Premier to combine their apparel brands.
