The Myer Holdings Ltd (ASX: MYR) share price may have new life breathed into it following speculation of a mega-merger with retail rival David Jones, as reported in The Age this morning.
The catalyst leading this development appears that David Jones is reportedly being acquired, with Goldman Sachs helping to facilitate the deal. David Jones has been owned by South African retail group Woolworths Holdings Limited since 2014.
The media outlet reported that Wilson Asset Management, which owns a stake in Myer, supported the possibility of a merger between the two department store retailers.
"We absolutely think it would make sense. There is a lot of real estate that could be consolidated. The synergies, I assume, would be very, very large," Wilson portfolio manager Oscar Oberg was quoted as saying.
But Oberg also questioned the logic of having two department stores owned by a single entity right next to each other.
"I think there is still a lot of goodwill in the brands. But there's a question of whether you'd need a Myer and a David Jones in the same block," he said.
Other experts impartial to the deal weighed in, including Queensland University of Technology professor Gary Mortimer, who said:
There are certainly economies of scale if you merge the two, deal with one set of suppliers and develop a sophisticated private label range, and focus on [retail] experience.
David Jones CEO Scott Fyfe told The Age that retail sales were beginning to normalise post-COVID:
Interestingly, what our results across the last year or so have shown is that, outside of a lockdown environment, customers flock back to their retail purchases in a big way.
Myer Holdings share price snapshot
The Myer Holdings share price is up 1.79% trading at 57 cents at the time of writing.
Shares in the company have also lifted 26.6% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 11% over the same period.
Despite the recent upward trend, Myer shares are a long way from the trading heights of early 2010, when they were swapping hands for almost $3.70 apiece. The ASX retail share listed on the ASX in November 2009.
The company's market capitalisation is around $468 million, based on the current share price.
