Why does Solly want Myer? – History repeating itself

 

By Brian Walker
CEO & Founder, Retail Doctor Group


“How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions.”

Mario Gabelli

A sector in disarray globally, performance in decline, and yet an iconic Australian brand is strengthening their balance sheet, improving e-commerce, pruning in physical space, well-managed against the tide, and still refining its position in offers & omnichannel retail.

Solly Lew, a competitor and supplier, extends his shareholding through Premier investments but why?

Premier is cashed up, job-keeper assisted and trading well through Covid with a strong management team. Its shareholders backed Mr. Lew’s decision to spend another $16 million to increase its stake in Myer in its bid to overthrow the board. However, they are reluctant to support a full takeover of the department store. Premier, which is 42 per cent owned by Mr Lew’s Century Plaza, bought 41.1 million Myer shares on Monday, increasing its 10.8 per cent to 15.8 per cent stake. They eventually called on the entire Myer board to resign.

Why the interest, and why the conflict?  

The answer probably lies as far back as 2014.

A 17-year stand-off between South African retailer Woolworths and retail magnate Solomon Lew has ended after Mr. Lew agreed to accept Woolworths’s $209 million offer for his 11.8 per cent stake in Country Road.

Woolworths, which completed a $2.2 billion takeover of David Jones last week, increased its stake in Country Road from 88 per cent to 99.84 per cent on Friday, after Mr Lew agreed to accept the $17-a-share offer.

Earlier on Friday, Woolworths declared its $213 million mop-up offer for Country Road unconditionally after receiving clearance from the Australian Foreign Investment Review Board.

Mr Lew’s decision to sell out ends one of the longest and most bitter stalemates in Australian corporate history. Mr Lew’s Australian Retail Investments built up a near 12 per cent share in the apparel retailer in 1997, preventing Woolworths from gaining full ­control, and has been a vocal critic of its performance.

So, is this playbook reinventing itself? Probably as one could argue that Mr Lew is protecting his supply channels, buying low and selling higher, riding the last wave of this iconic retailer or genuinely believing that Myer has a dominant future in Australian retailing.

A shrewd and canny operator or an investor who is known for the dispassionate logic of his investments.

We suspect it’s the former rather than the latter.

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