Australia's David Jones to assess $3 billion Myer merger
SYDNEY (Reuters) - David Jones Ltd DJS.AX, Australia's second-biggest department store chain, said it will investigate the value of a proposed merger with Myer Holdings Ltd (MYR.AX), the strongest sign yet that it will consider the A$3.4 billion ($3.09 billion) deal.
A day before it reports half-yearly earnings, David Jones on Tuesday said it had hired management consultant Port Jackson Partners Ltd to assess the value of "synergies that can be extracted if David Jones and Myer were to merge".
David Jones rejected a takeover bid from larger rival Myer last year but Myer in February asked the Sydney-based upmarket retailer to reconsider the offer. Both companies have valuable property assets although they have struggled with soft consumer confidence, patchy retail spending and failure to grasp opportunities in online retailing.
David Jones said it would conduct due diligence on Myer if discussions progressed, requiring the Melbourne-based company's cooperation.
"Once this work is completed we will be in a position to engage in a meaningful way with Myer," David Jones Chairman Gordon Cairns said in the statement.
Both companies' chief executives had been due to leave but Myer, in its second approach to David Jones on February 20, said its CEO was staying on, a move widely seen as a sweetener for a takeover.
Then on March 11, David Jones said its CEO was also reversing his decision to leave and would stay.
David Jones's last public statement on the Myer proposal was a response to its February 20 approach, saying it would consider "any proposal which is on terms that are in David Jones shareholders' best interests".
David Jones shares were trading almost 2 percent higher at A$3.34, having risen 17 percent since January 30 when it first disclosed the Myer merger proposal. Myer shares were up 1 percent, in line with the broader market.
($1 = 1.0999 Australian Dollars)
(Reporting by Byron Kaye; Editing by Stephen Coates)