The merger of Myer and Premier Investments’ womenswear and youth brands could extract $55 million a year in savings if the alliance succeeds, and land the department store chain a $1 billion-plus valuation, brokers say.

The possibility of a tie-up was announced on Monday, and under this arrangement, Myer would acquire Premier’s Apparel Brands business, gaining Just Jeans, Jay Jays, Dotti, Portmans and Jacqui E from Solomon Lew’s listed investment business in exchange for new Myer shares. Mr Lew would also join the Myer board, where Premier already holds two seats.