David Jones (DJS) shares rose 1% yesterday after the market got the first dose of sense from the retailer about the future treatment of the merger proposal from Myer (MYR).
A statement issued yesterday said David Jones will undertake a thorough assessment of Myer’s merger proposal.
As a result the shares rose to $3.325, up just over 1% on the day.
The announcement yesterday came a day before the release of the retailer’s interim results this morning.
Like the Nufarm announcement yesterday, the David Jones statement yesterday seems to be an attempt to separate the contentious merger story from the results – which some analysts are confident will show the retailer doing better.
Chairman Gordon Cairns (appointed a week ago) said in yesterday’s statement the company had re-appointed consultants, Port Jackson Partners, to help it review the proposal, including any benefits for the two retailers.
He said the review will also assess the benefits of David Jones proceeding on a stand-alone basis.
MYR Vs DJS 1Y – David Jones to finally take a hard look at Myer merger idea
The latest statement from David Jones is a shift for the company after it stated last year there would be no fair value to its shareholders in merging with Myer.
But such a shift was to be expected with a new chairman and changes on the board – director Leigh Clapham resigned yesterday, according to the statement from Mr Cairns.
David Jones said that, given the Myer proposal was based on a share swap, and if talks between the two companies proceeded, an assessment would have to be made of Myer’s business, requiring Myer’s co-operation.
David Jones chairman Gordon Cairns said it was imperative that his company undertook initial strategic work, prior to talks with Myer.
"It will enable us to have a full understanding of the value that can be delivered to our shareholders if David Jones were to merge with Myer, versus the value that can reasonably be expected to be delivered to our shareholders if the company continues with its Future Strategic Direction Plan on a stand-alone basis," Mr Cairns said in yesterday’s statement.
"Once this work is completed, we will be in a position to engage in a meaningful way with Myer."
The latest developments in the proposed merger follow David Jones chief executive Paul Zahra reversing his decision to quit the company after Mr Cairns was appointed chairman, and Myer CEO Bernie Brookes’ re-appointment to his job.
Myer shares closed steady on $2.66, so no one in the market went mad over the David Jones’ statement, which was more a belated recognition that the company had to take the proposal more seriously than it did in late 2013 – even if it ends up in getting a thumbs down from the review.
