Takeover rumors 'have no basis' but fuel Myer shares

"We are not considering an acquisition of Myer and there have been no discussions regarding an acquisition with advisers or between the two companies.”

Myer declined to comment on Friday, citing a policy of not responding to "rumour and speculation".

Myer proposed a "merger of equals" between the two department stores four years ago, but was rebuffed by David Jones, whose shareholders then received a better offer of $2.1 billion from Woolworths.

The rationale was that a merged company would have the size to negotiate better rent or lease exits from landlords, cheaper prices from suppliers, and greater efficiency by combining corporate teams.

Anton Tagliaferro from Investors Mutual, which is Myer's second largest shareholder with a 9.8 per cent stake, said he supported the idea of a merger but had not been approached by David Jones.

“In terms of the synergies, in terms of combining the store footprint they have, in terms of the synergies from back office, in terms of the buying benefits - certainly it would be a worthwhile thing," Mr Tagliaferro said.

“There is value in Myer. It’s got $3 billion in sales, it’s got a fast-growing online business, it’s got a loyalty program with over 5 million members. So I can understand why various parties, including David Jones and lots of other parties, may be interested."

Mr Tagliaferro said that any fair takeover offer would have to be "well north" of the current share price. The stock floated in 2009 at $4.10.

Myer's second largest shareholder, Solomon Lew's Premier Investments, bought its 10.8 per cent early last year.

It has been speculated that Premier caught wind of an impending David Jones takeover and bought its shares as a blocking stake that would make it a kingmaker in any deal, setting up a repeat of the scenario when Woolworths bought Country Road.

Daniel Muller, portfolio manager at Vertium Asset Management, was sceptical about the merits of any merger, noting the retailers were trying to get out of leases not increase their footprints.

"Some of the leases Myer is in are very long. You can’t go: ‘I’ll take over and hand the keys back to Westfield for half the stores'. It doesn’t work that way'," he said.

“If it was that simple Myer would do it themselves. They’re stuck between a rock and a hard place, why would someone else want to take on that pain?"

Both stores Myer and David Jones are struggling amid low consumer sentiment and broader shifts in the retail landscapes that have challenged the department store model, including the rise of global fast-fashion retailers H&M, Uniqlo and Zara.

Myer, which has been without a chief executive since Richard Umbers' departure in February, revealed a $467 million half-year loss last month and a $500 million writedown which cut its net assets in half.

Woolworths wrote down the value of David Jones by $712 million in January, essentially conceeding it overpaid when it forked out $2.1 billion for the store in 2014.

David Jones' comparable sales fell 3.3 per cent in the six months to December 24, while Myer's fell 3 per cent in the first half.