Myer approached rival David Jones (DJs) about a merger, it has been confirmed.
The deal, first reported in AFR 'Street Talk' claimed Bernie Brookes department store Myer, approached high street counterpart DJ's about a "union" in a scrip deal at a ratio of 1.4 Myer share for every one DJ share. The deal was worth a reported $3 bn.
However, David Jones the high end department store, refused the offer of a "union" made in October 28 last, it confirmed in a statement to the ASX, in response to the AFR report.
Myer proposed a deal for DJs shareholders whereby "David Jones shares would be acquired by Myer in exchange for Myer shares at a zero premium exchange ratio that is 1.06 shares in Myer for each DJ share," DJs confirmed.
The timing of the proposal is interesting as just one day later on October 29, two of DJ Directors, Steve Vamos and Leigh Clapham bought shares in the company just days before it announced a suprise sales rise of 2.1%. The purchase came under scrutiny of ASIC for possible share trading, although the case was recently closed.
Myer also wanted due diligence access and company information, as part of the proposed merger.
DJ said it did consider the "invitation" but the Board decided "the potential transaction did not have sufficient merit."
The deal would include "substantial" market and business risks and "involve diversion of company resources over a lengthy period with great uncertainty over the final outcome."
DJ also said it is not currently in any talks with Myer about a merger or any other such deal.
According to Fairfax Media, Myer chairman Paul McClintock is believed to have desired the "union" on the basis that the synergy between the two Australian high street staples would strengthen its business against international chains, and cheaper fashion etailers.
Fashion majors like Topshop and Zara stores have all have recently entered Australia, making a big play for the image conscious Aussie consumer, and webstores like Asos and British fashion chains like River island also offer free or cheap Aussie shipping.