Myer shares are surging on talk of a takeover by David Jones

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  • David Jones is reported to be considering an offer for rival Myer.
  • Myer sales have been sliding in an increasingly competitive retail environment.
  • David Jones is said to have appointed advisers to help look at a deal.

Shares in department store Myer jumped following a report of a possible acquisition by rival David Jones.

At the close, they were up 7.2% to $0.37.

“David Jones is believed to be once again revisiting a possible acquisition of Myer,” reports The Australian.

The newspaper said that the owner of David Jones, South African retailer Woolworths, has appointed advisers.

Myer sales have been sliding, as the retailer comes under increasing pressure from digital players, with the important Christmas sales period failing to deliver.

The retailer earlier this month reported a loss of $476.22 million for first half, driven largely by a $515 million impairment, with sales down 3.6% to $1.72 billion. Dividends are cancelled.

Restructuring, store exit costs and impairment of assets came in at $538.23 million.

Garry Hounsell, who is Myer executive chairman while the company seeks a new CEO, highlighted poor execution of the retailer’s strategy, including what he called a “failure” to respond to the heightened competitive environment prior to Christmas.

The Myer board is under attack by its largest shareholder, Solomon Lew’s Premier Investments with a 10.8% stake, which is agitating for the chairman and directors to be replaced.

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