Solomon Lew says Myer, David Jones merger ‘doesn’t make sense’

The possibility of a merger between Myer and David Jones has all but been snuffed out after billionaire and major Myer shareholder Solomon Lew said a merger made no sense.

Retail billionaire Solomon Lew has all but snuffed out any chance of up-market department store David Jones merging with rival Myer to form a new heavyweight Australian retailer, saying a combination of the two department stores would not make sense and not have his support.

Mr Lew’s Premier Investments, which reported its full-year results on Thursday, is Myer’s largest shareholder with a stake of 22.87 per cent and the businessman has enough shares in his pocket to derail and completely possibly block any potential merger with David Jones.

Speculation of a possible merger of the two rival department stores has gathered pace this year as the South African owners of David Jones, Woolworths Holdings, considers the future of the retail after it bought the business in 2014 for $2.1bn.

In August, Woolworths Holdings confirmed for the first time that it is actively considering the sale of the 184-year-old retailer, with many looking to Mr Lew as a possible buyer of David Jones or engineering a merger with Myer.

However, on Thursday as he presented Premier Investments latest financial results, Mr Lew told The Australian he didn’t support a David Jones/Myer merger.

Major Myer shareholder Solomon Lew says a merger between the department store chain and its staunch rival David Jones wouldn’t make sense. Picture: Aaron Francis

“I wouldn’t support it (a merger),” Mr Lew said.

“I don’t think it makes sense. Obviously, we know the retail business, and it just doesn’t make sense,” Mr Lew said.

In 2013 Myer proposed a $3bn share-based merger with up-market rival David Jones, dubbed at the time a “merger of equals”, that would have created then a department store powerhouse with annual sales of $5bn and a network of more than 100 stores.

At that time of the Myer merger offer Mr Lew was not a major shareholder in the company, but was, as he is now, a keen observer given Mr Lew’s family, private and public company interests remain one of the biggest suppliers of fashion and apparel to the Myer chain.

It will be extremely difficult for Myer and David Jones to now put up again the merger deal, given Mr Lew has now signalled his opposition to such a proposal.

It also comes as Mr Lew recently increased Premier Investments’ stake in Myer and requested the appointment of ex-Myer Grace Bros boss Terence McCartney as director.

Premier Investments is the department store’s largest shareholder with a stake of just under 23 per cent and has tried repeatedly to get a number of candidates, including Mr McCartney onto the Myer board in recent years.

Mr Lew is seeking a motion at the Myer annual meeting in November to place Mr McCartney, a non-executive director of Premier Investments, on the company’s board.