In major news for Australian stocks, Myer Holdings LimitedAustralia: Malaysian Ringgit) shares are expected to rise as the company acquires Premier Investments Limited (AU:PMV) apparel brands. Through this potential acquisition, which includes Premier’s brands such as Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti, Myer aims to establish itself as a leading retail and apparel company in Australia and New Zealand.
Following the announcement, Myer shares rose 20% on Monday, while Premier Investments shares rose nearly 7%.
Myer Holdings operates a chain of department stores across Australia, offering clothing, shoes, toys and electrical appliances, while Premier Investments is a conglomerate group that operates a chain of speciality retailers.
Myer Offer Details
Myer’s proposal would see it acquire Premier’s apparel brands business by issuing new shares to Premier. The merger aims to boost Myer’s market share by expanding its private label and exclusive brands. The apparel brands business, which has 717 stores, generated revenue of A$845 million in the 2023 financial year.
Myer intends to pursue the combination in a manner that ensures a consistent capital structure for both companies while preserving sufficient cash to pursue growth opportunities.
Premier and Myer have agreed to conduct due diligence on each other’s businesses and negotiate the remaining terms of a potential transaction, although there can be no assurance that the non-binding proposal will lead to a formal offer.
The agreement also terminates Premier Investments’ ownership interest in Myer. Premier plans to distribute all of its Myer shares to its shareholders. As a result, Premier shareholders will become direct shareholders of Myer while maintaining their current shareholdings in Premier.
Is Myer stock a buy?
TipRanks has assigned 1 “Hold” recommendation to MYR stock. Myer Holdings’ share price target is A$0.75, 3% below current trading levels.
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