By Stuart Condie

SYDNEY--Australian retail conglomerate Premier Investments will sell its apparel brands portfolio to Myer in exchange for an enlarged stake in the 124-year-old department-store operator, which it will then distribute to shareholders.

Premier on Tuesday said it would receive 890.5 million new shares in Myer in exchange for its Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E brands. The stock would be valued at 863.8 million Australian dollars ($568.7 million) based on Myer's current share price.

The new shares would represent 51.5% of Myer's enlarged share base. Premier is already Myer's largest shareholder with a 31% interest.

Premier plans to distribute its entire stake to shareholders via a combination of a capital return and dividend, leaving it to focus on its faster-growing Peter Alexander sleepwear and Smiggle stationery businesses. Premier shareholders would receive about 7.2 Myer shares for each Premier share they own.

"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," said Premier Chairman Solomon Lew, who will join Myer's board as a non-executive director.

"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."

Premier would also still own its 25% stake in small-appliance maker Breville and property assets. Premier and Myer expect the deal to complete in early 2025.

Myer said that the apparel brands portfolio, which generated A$791 million in revenue across Premier's last fiscal year, will significantly enhance its scale and capability to drive growth, leverage and investment.

If its shareholders approve the transaction, Myer will own more than 780 stores across Australia and New Zealand.

The department store chain, which in recent years has shut some stores and boosted its online capabilities in response to competition from specialist retailers and the likes of Amazon.com, expects an annual earnings benefit from the combination of at least A$30 million on a run-rate basis over the short to medium term.

The transaction will be significantly accretive to earnings per share on a pro-forma basis, Myer added.

"Myer and Apparel Brands have highly complementary store footprints and customers who will benefit from an expanded omni-channel ecosystem that enables them to engage with the group's loved brands when and how they want," Myer Executive Chair Olivia Wirth said.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

October 28, 2024 18:57 ET (22:57 GMT)

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