Myer Holdings (MYR) has renewed its push to discuss a potential merger with the board of David Jones (DJS), releasing a letter to the chairman of the upmarket chain that extols the benefit of a tie-up.
At the same time, Myer abandoned the search for a new CEO and extended the contract of chief executive officer Bernie Brookes for an open term. Brookes said he would put himself forward as a potential head of the merged entity.
Investors responded well to the developments, sending Myer shares 3.66% higher to $2.55 at 1115 AEDT, against a benchmark index lift of 0.25%.
David Jones shares were 1.09% higher at $3.235.
Myer Chairman Paul McClintock said the re-appointment of Brookes would provide clarity about the leadership of Myer and would provide “at least one option” for a joint CEO of a merged entity.
“We remain convinced that the rationale for a combination of Myer and David Jones is highly compelling, creating a sustainable, more competitive retailer and delivering significant value for shareholders of both companies,” McClintock said in a letter released to the Australian Securities Exchange.
McClintock’s letter to David Jones Chairman Peter Mason seeks to address the concerns raised by Mason over an all-stock, nil premium merger, and stressed the deal would be a “true merger of equals”.
The Myer chief said there was strong support for the strategic rationale from the investment community and reiterated cost savings of some $900 million.
“We hope that David Jones may come to a view that such a transaction as proposed, or indeed as they might wish to review with us, would be in the interests of both companies’ shareholders.
"We look forward to the opportunity to meet with David Jones in the future to discuss these matters," McClintock said.
David Jones in October rejected Myer's offer of 1.06 of its own shares for each DJs share because it offered no price premium to compensate investors for the risk of combining the businesses, but it did not make the receipt of the offer public at the time.
Myer went public last month, publishing its snubbed offer in full in a highly unusual move. Several advisory teams and senior bankers and lawyers worked on the plan, from Goldman Sachs as financial advisor; management consultants Bain & Co; corporate advisor Flagstaff Partners; Allens as competition legal advisor; Clayton Utz as legal advisor; KPMG on tax; Michel Retail as property consultant; and PR firm John Connolly.