A merger between department stores Myer and David Jones is appearing increasingly unlikely as their diverging share prices weaken Myer’s position.
Both companies opened higher on the ASX today, but a 0.44 per cent rise for Myer was trumped by a 1.26 per cent increase for David Jones by 10:30am (AEDT).
That followed on from a bad day for Myer yesterday, with a loss of 5.37 per cent in contrast to a 2.59 per cent gain for DJs.
An analyst note from Macquarie Private Wealth last week noted the drift in share prices between the retailers made it harder to see a merger proceeding without Myer paying a premium.
Fairfax newspapers are reporting today that Myer is looking at ways to sweeten the proposal, including taking on a debt of $500 million to offer cash along with shares.
Myer made its first approach last October with a nil-premium merger offer of 1.06 of its shares for every David Jones share.
Since then Myer shares have fallen about 14 per cent while David Jones shares have dropped about 5 per cent.
Today’s market movements now have Myer’s share price at $2.30 against $3.21 for David Jones.
Yesterday David Jones announced it had appointed a second investment bank to advise on the merger proposal.
David Jones named Macquarie Capital as joint investment banking advisors alongside Gresham Partners Advisory.
Last week DJs also appointed management consultants Port Jackson Partners to review the proposal.