👉 Background: Myer is one of the OG Australian department stores - it's been battling neck and neck with its arch rival David Jones for over 120 years. But since Myer listed at a $2.2 billion valuation in 2009 it has been a rollercoaster ride for investors (with mainly downs)

👉 What happened: Recently though, there were signs of a Myer-glow-up - with a new CEO and plans to merge with Apparel Brands. But now, Myer has warned that its earnings before interest and tax (EBIT) dropped by 25% compared to last year for the most recent 5 months to the end of December.

👉 What else: Next minute: Myer's share price got smashed by 18%. But it gets even worse because Apparel Brands' stores - Dotti, JayJays, Just Jeans and Portmans - also saw its EBIT whacked in the first 22 weeks of the year. And, this puts extra pressure on the merger, which is expected to be voted on this Thursday.

What's the key learning?

💡Big public mergers need big shareholder buy-in. When a publicly listed company wants to tie the knot with another business, the Board can’t just swipe right—it needs shareholder approval. In this case, Myer needs more than 50% of its shareholders need to vote yes to the deal.

💡While the Board of Directors can try to encourage shareholders to vote yes, they can’t force them. And despite their best efforts, these merger proposals don't always work.

💡In 2006, Airline Partners Australia tried to acquire Qantas with Qantas' board supporting the deal. But the acquisition failed with only 46.5% shareholder approval. And given Myer and Apparel Brands' underperformance in the last 5 months, shareholders may have some concerns around the $950 million price tag.

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