Solomon Lew could rejoin the Myer board as soon as February
If Myer and Premier Investments shareholders approve their historic $880m deal, billionaire Solomon Lew will return to the department chain’s board after more than two decades.
Billionaire Solomon Lew will rejoin the Myer board next month after a near 23-year absence if shareholders at Premier Investments and Myer approve their historic $880m deal to sell Premier’s Apparel Brands to the department store owner.
If the acquisition is waved through by both sets of shareholders – which is widely expected – Myer will invite Mr Lew onto the board next month. It will mark a return to the Myer board following Mr Lew’s ejection from the old Coles Myer board in 2002 after a shareholder revolt.
Mr Lew will also reunite with the deputy chair of Myer, Gary Weiss, a longtime friend and business ally, who was also formerly a director of Premier Investments. Dr Weiss is the Myer board lead independent director.
On Thursday, Myer shareholders will be the first to vote on the deal to buy Just Jeans, Portmans, Jay Jays, Dotti and Jacqui E – grouped as Premier’s Apparel Brands unit – when they meet in the Melbourne CBD at 9am AEDT and where executive chairman Olivia Wirth will make her final push to investors to back the acquisition.
Two hours later and across town in Albert Park’s Pullman hotel, Mr Lew will hold court where shareholders there will also be asked to vote on the transaction that will see Myer issue 890.5 million shares to Premier to pay for the Apparel Brands, which will in turn then be handed to Premier shareholders.
Despite a recent profit warning from Premier Investments, which included disappointing sales for the Apparel Brands that Myer intends to buy, as well as a poorly trading update from Myer, shareholders of both companies are expected to vote in favour of the transformative deal for the traditional department store owner.
Premier Investments, which also owns fashion label Peter Alexander and kids stationery chain Smiggle, is the largest shareholder in Myer with a 31.2 per cent stake and will not vote its stake at the Myer extraordinary general meeting.
Mr Lew, who controls 42.43 per cent of Premier Investments primarily through his Century Plaza private investment vehicle, will vote his shares at the Premier Investments EGM.
While it will take some time for the paperwork and normal corporate procedures to run their course, it is expected that Mr Lew will be appointed a newly minted Myer director in early February. Once ensconced on the Myer board, Mr Lew will join Dr Weiss as well as current Premier Investments director Terry McCartney, who has been on the Premier board since 2016.
Under the deal being put to shareholders, Myer will issue a tranche of its own shares worth around $810.4m to Premier Investments to pay for the Apparel Brands businesses, with this stock to then be distributed in specie to Premier shareholders. This series of scrip transactions will ultimately see Premier Investments cease being a shareholder in Myer and Mr Lew emerging as Myer’s largest shareholder with a stake of around 26.8 per cent.
The back-to-back EGMs on Thursday comes as Premier Investments this month issued a disappointing trading update to the market that showed the impact of deteriorating trading conditions on its Apparel Brands businesses that sent its share price diving more than 15 per cent. Myer too issued a trading update on the same day, revealing weakening sales and margins, with its shares falling by almost 25 per cent.
However, despite the tougher trading conditions for the discretionary retail sector and in particular sharply shrinking profitability for Premier Investments’ Apparel Brands, Myer and its executive chairman Ms Wirth still heavily back the deal and believe it will help transform Myer into a stronger and more diversified retailer.
If approved by shareholders, it will see the 124-year-old Myer leap from a retailer that currently owns just over 50 department stores to taking on 780 specialty stores, 17,300 staff and oversee combined sales of more than $4bn.
In her pitch to investors, Ms Wirth has argued the deal is compelling for Myer shareholders for a range of reasons, including creating a leading Australian omni-channel retail platform with significantly enhanced scale and capabilities to drive growth and operating leverage benefits. She has also highlighted the opportunity to introduce Apparel Brands’ highly complementary customer base to Myer’s leading loyalty program, Myer One, driving enhanced cross-shop opportunities and incremental sales growth across the combined group.
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