Did the Premier Investments share price really just crash 25%?

What's going on with this stock on Wednesday? Let's dig deeper into things.

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The Premier Investments Ltd (ASX: PMV) share price is catching the eye on Wednesday morning.

At the time of writing, the retail conglomerate's shares are down 25% to a 52-week low of $21.40.

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.

Image source: Getty Images

What's going on with the Premier Investments share price?

Thankfully for shareholders, today's decline is not because of a bad update or a broker downgrade.

In fact, today's crashing share price could be described as a good thing for the Smiggle and Peter Alexander owner's shareholders.

That's because it signals that the merger of the company's Apparel Brands business with Myer Holdings Ltd (ASX: MYR) is moving to the next step.

What's the latest?

This morning, Myer issued Premier Investments with 890.5 million new shares in the department store operator.

However, Premier Investments isn't holding onto these shares. Along with its existing holding in Myer, the retailer is offloading a total of 1,151.5 million Myer shares to eligible shareholders through an in-specie distribution.

Much like a dividend, there is a record date, ex-distribution date, and payment date for this payout. And today just happens to be the day that the Premier Investments share price has gone ex-in-specie distribution.

This means that if you were holding the company's shares at yesterday's close, you will be eligible to receive your share of the Myer distribution when it is paid to shareholders.

So, while your holding in Premier Investments may have lost a quarter of its value this morning, this is theoretically being offset by the value of your new Myer shares.

It is anticipated that eligible shareholders will receive approximately 7.2 Myer shares for every 1 Premier Investments share held on the record date. These are expected to be issued to eligible shareholders on 6 February 2025.

Based on the latest Myer share price of 94 cents, these 7.2 shares currently have a value of $6.77 per Premier Investments share.

Commenting on the merger last year, the company's chair, Solomon Lew, said:

This is an opportunity for our team and our shareholders to play an important role in the future of the Australian and New Zealand retail landscape. Myer and our Apparel Brands will be stronger together – delivering vertical integration, scale, additional margins and loyalty opportunities.

Meanwhile, Premier's Board will be focused on the ongoing growth and performance of Smiggle and Peter Alexander, including as they pursue local and international growth opportunities.

Here's hoping the move will be a success for both companies.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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