You have to hand it to Solomon Lew. His latest corporate restructuring strategy is a masterclass. It’s complex, brilliant and shows the remarkable acumen of the retail supremo as he edges closer to 80.
He has taken his sweet time, but Lew appears to be putting the pieces in place to cash out a decent part of the retail empire he has spent decades building.
Premier Investments chairman Solomon Lew would get a seat on Myer’s board if a proposed merger went ahead.Credit: Eamon Gallagher
Under a proposal announced on Monday, department store chain Myer will buy the older, and arguably more challenged, apparel brands of Jay Jays, Just Jeans, Dotti, Portmans, and Jacqui E, which are currently part of Lew’s empire. They are owned by Premier Investments, in which Lew has a 42 per cent controlling stake.
Myer’s largest shareholder, as it turns out, is Premier. And, it would be naive to believe Lew is not the hand behind this proposed deal, regardless of who gets the credit for engineering it.
The deal is structured in a way that lets Myer buy the apparel businesses using its own shares rather than cash. Premier won’t keep these Myer shares but instead distribute them directly to its own shareholders (the largest of which is Lew).
So, here is what the chessboard will look like if and when the deal is done.
Myer’s minority shareholders are getting excited by the idea that any shakeup could ignite growth. Credit: Getty
Myer will own its department stores and also a chain of lowish-end brands (some 717 stores) with a challenged growth profile, but with margins that well exceed those of Myer. And Lew’s shareholding in Myer will land at somewhere between 25 and 30 per cent, but he will own the stake directly and no longer via Premier.
Lew also won’t need to get his hands dirty making decisions on the day to day running of Myer (that will be up to the department store’s retail novice and newly appointed executive chairman, Olivia Wirth) but he will have plenty to say on strategy and direction and plans to join as a director.