Myer and Premier: Fair Value Estimates Unchanged on Myer’s Proposed Acquisition of Apparel Brands

No-moat Myer has made a nonbinding, indicative, and conditional proposal to acquire no-moat Premier’s Apparel Brands business, comprising Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti. Apparel Brands’ fiscal 2023 sales of AUD 845 million accounted for roughly half of Premier’s group revenue, and the acquisition would materially lift Myer’s sales, which stood at AUD 3.4 billion in fiscal 2023. Premier’s board is considering the proposal. With no firm deal and the price tag unknown, we maintain our fair value estimates for Myer and Premier at AUD 0.75 and AUD 20.50, respectively. At current share prices, Myer looks fairly valued and Premier trades at a significant premium to our value estimate.