With all the focus on the possible merger of iiNet Limited (ASX:IIN) and M2 Group Ltd (ASX: MTU) in the telco sector at the moment, talk of another big acquisition in the retail sector has quietened down. But perhaps only for a short while.
Shopping for Myer?
Recently The Australian newspaper reported on the potential for retail guru Solomon Lew to use any number of his privately operated companies to attempt a takeover of struggling department store Myer Holdings Ltd (ASX: MYR).
Mr. Lew is the mega-rich boss of several private and public retail companies, with an entrepreneurial flair to suggest a full-time retreat to his Mediterranean super-yacht may be a while off yet.
Perhaps his most public role is as the chairman of the successful retail conglomerate Premier Investments Limited (ASX: PMV). Premier's recent success has been credited to the fast growth of its Peter Alexander homewear brand and children's stationery business Smiggles. This combined with a stable of other money-spinning apparel brands means the business has more than $250 million cash on its balance sheet looking for a home.
Premier Investments also has a substantial holding in kitchen appliance business Breville Group Ltd (ASX: BRG) and given Myer's market value is currently only around $780 million, there seems little doubt that Mr. Lew has the firepower to attempt a takeover.
Of course you don't build a billion-dollar personal fortune in retail without being a smart investor, which leaves the question would Mr. Lew see value in Myer?
Myer's department stores have developed an unfortunate reputation as the place to go when you want to escape the shopping crowds, and the share price has been tracking the declining earnings.
However, if Mr. Lew were to appear on the share register in some form or another it may be the first stage in a takeover bid.
Although if I were a Myer shareholder I wouldn't be holding my breath and any bid would likely only come opportunistically if the price got too cheap to ignore. Smart investors don't go looking for turnaround opportunities, they go shopping for gangbusters growth stocks on attractive valuations.
