(Updates with background and details throughout)

Oct 29 (Reuters) - Australian department store owner Myer will merge with retail billionaire Solomon Lew's Premier Investments' portfolio of apparel brands, in a deal valued at A$945.8 million ($622.71 million) in total, the companies said on Tuesday.

Under the deal, Myer will issue Premier 890.5 million new shares in the retailer along with an A$82 million cash contribution by Premier.

Lew's Century Plaza Investments will emerge as the top shareholder in Myer, with a 26.8% stake, and will also have his own seat on the board.

Myer will acquire Premier's Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti brands.

Premier has been looking to unlock higher value for its shareholders while it was working on a potential split of the firm into four Australia-listed entities. It was working on a possible spin-off of its sleepwear brand Peter Alexander and kids' brand Smiggle.

In September, Lew's firm parked plans of a proposed demerger of kids' stationery juggernaut Smiggle while exploring the tie-up with Myer.

Myer has faced a difficult year amid a pullback in retail and discretionary spending in Australia.

Its chair, Olivia Wirth, will continue to be the firm's boss after the deal.

Sales have fallen 2.9% to A$3.3 billion in the year to July 27, with profit plunging 26%.

Myer in June had said it approached its then top shareholder, Premier, to combine their apparel brands.

($1 = 1.5188 Australian dollars)

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Alan Barona)

((Rishav.Chatterjee@thomsonreuters.com))