Retailer David Jones (DJS) has revealed it was recently approached by rival Myer Holdings (MYR) to consider a merger around the same time of controversial share purchases by two David Jones board members.
Myer invited David Jones on October 28, 2013 to enter talks about a potential union, offering to give Myer shares to David Jones shareholders in order to create one company.
The offer was quickly rejected by the board of David Jones as the retailer's board saw little value in the tie-up given the deal offered no premium to shareholders.
"David Jones was previously approached in respect of a possible merger with Myer," the company said in a statement to the sharemarket on Thursday night.
"The David Jones board believed that the potential transaction did not represent sufficient value for David Jones shareholders."
The two companies are no longer in talks about any possible merger, it said.
David Jones revealed the details of the invite from Myer after media speculation about a merger deal.
It said it did not inform shareholders of Myer's approach at the time, because the proposal did not have sufficient merit to enter into any talks with its rival.
"The execution of any such a transaction would have substantial commercial, market, business and regulatory risks including the Australian Consumer and Competition Commission review process," the statement to the Australian Securities Exchange read.
The news is likely to increase investor anger surrounding share purchases made by two David Jones directors, Leigh Clapham and Steve Vamos, last year.
The trades, made on October 29, were the subject of an Australian Securities and Investments Commission (ASIC) investigation as they were made just days prior to the release of better-than-expected sales numbers. ASIC recently ended the investigation as there was insufficient evidence to support any assertions of insider trading.
The corporate regulator told The Australian that it had taken the non-binding merger offer into account during its investigation and didn't view it as material given it offered no premium.
"ASIC has investigated the David Jones matter and has considered thoroughly all relevant information, including the conditional proposal, and decided to take no further action," ASIC spokesman Matthew Abbott told the paper.