Troubled department store Myer could have a new owner by Christmas, with reports billionaire Solomon Lew and private equity firms are engaging in a bidding war.
Mr Lew recently dismissed speculation he was interested in Myer, but sources told Fairfax they would be “staggered” if he wasn’t examining the department store. Private equity firms, including Archer Capital, are believed to also be considering a bid. Myer has been battered by the burgeoning online retail sector, posting a 23 per cent fall in full year profit in September last year.
According to a report in Thursday’s Australian Financial Review, new Myer chief Richard Umbers is considering pulling the plug on two of its three planned department stores.
Mr Umbers is also expected to shut down a number of marginal stores when leases expire.
OptionsXpress market analyst Ben Le Brun said Mr Lew’s retail group Premier Investments was likely to be interested in taking control of Myer, with a plan to turn around sales and boost its online presence. “If the bid was approved and successful, it would probably be in new hands by the end of 2015,” he said.
Retail billionaire Solomon Lew. Photo: AAP
“What we’re talking about here is an all-out takeover.”
The improved performance of David Jones since its takeover by South African retailer Woolworths Holdings’ in July 2014 has probably led to suitors seeing potential in Myer, Mr Le Brun said.
“There’s the potential there for some kind of bidding war,” he said.
But Morningstar analyst Farina Parsons said Mr Lew was unlikely to be interested in Myer, and private equity will have limited potential to cut costs.
“Department stores are challenged and Solomon Lew is more about being the actual manufacturer and owner of brands,” she said.
“I don’t see what sort of synergy benefits or really what they can achieve by going out there and buying Myer.”
Shares in Premier Investments, which owns clothing brands Just Jeans, Dotti and Portmans, are near record highs, while Myer recently hit a record low.
Speculation of takeover interest boosted Myer shares on Wednesday, adding 11.5 cents, or 8.8 per cent, to $1.425.Premier Investments shares dropped two cents to $13.22.
Mr Lew was a director, chairman and vice chairman of the former Coles Myer group between 1985 and 2002.
Coles sold Myer to US private equity group Newbridge Capital in 2006, before it was re-listed on the share market in 2009. Comment has been sought from Premier Investments.