DJ’s denial fails to dampen whispers

MYER shares have surged amid renewed speculation David Jones is weighing up a takeover offer for its long-time arch enemy.

Vigorous denials by David Jones yesterday failed to convince investors a tie-up between the two department store chains was not a possibility, with Myer’s share price surging more than 12 per cent during trade. They closed up 2.5c or 7.25 per cent at 37c.

The latest bout of speculation that South African retail titan Woolworths Holdings — owner of David Jones and the Country Road Group — was crunching the numbers on a possible deal came after Myer’s share price hit an all-time low of 34.5c on Thursday.

Any takeover deal would involve negotiations with Myer’s biggest shareholder, retail billionaire Solomon Lew.

David Jones moved rapidly to hose down speculation, saying in a statement that “these rumours have no basis”.

“We are not considering an acquisition of Myer and there have been no discussions regarding an acquisition with advisers or between the two companies.”

But with the rumour reviving the concept that Australia’s two venerable department store chains could become one, investors rallied around Myer.

Mr Lew and Woolworths chief Ian Moir have previously locked horns, with the former grabbing a stake in David Jones when the South African retailer first started looking to take it over earlier this decade.

A Myer spokesman said the retailer had no comment, while the Lew camp said they did not expect any deal.

A combined group would be able to find cost savings by combining head office functions, and would also have more clout in trying to secure rent reductions or break leases with landlords — a key issue for Myer, which has warned it might need to close 19 stores.

Myer approached David Jones in 2013, for a “merger of equals”, but that was rejected.

Former Myer chief Bernie Brookes said any merger between the two would have to be decided by the competition regulator, not shareholders.

Mr Brookes was running Myer when it approached David Jones — a proposal the Australian Competition and Consumer Commission said it would need to closely examine.

“Ultimately, whether it works and whether it ever happens is largely going to be controlled by the regulators,” Mr Brookes said earlier this year.