Myer float stirring high interest with 499.5 million shares on offer

Monday September 28, 2009

Department store chain Myer has announced plans to raise over $2 billion through a well publicised share offering in a effort to expand the brand nationwide and pull ahead in the recovering economy.

The Myer share offering announcement, the largest listing on the Australian Stock Exchange since the massive Telstra Corp in November 2006 and since the Global Financial Crisis, has stirred high interest in many investors with over 140,000 requests for the company's prospectus detailing the company's plans for growth for the future. This includes the launch of 15 new Myer stores nationwide including three new stores expected to be open within the next five years.

The Myer prospectus outlines the share offering with Myer to have up to 499.5 million shares on offer, priced between A$3.90 - A$4.90.

Based on requests for the prospectus and similar interest levels, industry experts are predicting that the Myer share offering will attract a high level of retail investors and institutional investors with the 3.1 million loyalty Myer card holders also able to pre-register their expressions of interest.

The prospectus details that the company will list on the Australian market on November 2 with the company's private equity owners since May 2006, TPG and Blum Capital, offering shares anywhere between 479.3 million to 499.5 million.

Myer departments stores, with 65 located around Australia, is forecast to generate a massive $3.36 billion in 2009-10 in total sales with Myer valued at 14.3 to 17.3 times this figure, according to the shares on issue and valuations.

Currently TPG and Blum Capital currently hold a combined stake of 84.2 per cent with the Myer family and managers with the remainder. This will experienced a massive shift after the share offering is completed. Stakes of the company can be divided up as follows for the primary stakeholders according to the Myer share offering prospectus:

• TPG and Blum - between 0 per cent and 13.5 per cent depending on the level of investor demand
  
• Myer family - 0 per cent to 1.5 per cent stake
• Myer staff - 7.7 per cent stake - will be offered $725 worth of shares at no cost

Myer's prospectus shows plans to pay shareholders a full-year dividend of 20.5 cents to 21.2 cents, fully franked. It will have pro-forma 2010 earnings per share of 27.3 cents to 28.3 cents.

The Myer share offer will be launched officially on October 6 to retail investors, with an attached closing date of October 23, while institutional investors will have from October 28 to October 29. Pricing and allocation of shares is expected to be announced on October 30.

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