The final step in Solomon Lew's slow campaign to regain control of Myer (ASX:MYR) - 35 years after his first attempt failed- has been set in motion with Myer issuing an offer to Lew's Premier Investments to buy some of his retail chains.

News of the possible deal saw Myer shares leap 18% at the opening on Monday morning on the ASX, reaching an early high of 76 cents. They were trading around 74 cents—up more than 15% after the first half hour of dealings. Premier shares were up a more sedate 4.1% at the same time.

Lew has a near 29% stake in Myer, built up steadily over the past seven years. For many investors, a closer arrangement between the department store chain—which has fought its way back from near collapse—and Lew's high-performing chains was always on the cards.

On Monday, Premier revealed that it had been approached by Myer to explore a potential combination with Premier's Apparel Brands business via an all-scrip merger. This would see Myer acquire Premier's Apparel Brands business—which includes Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E—in exchange for the issuance of new shares in Myer to Premier. Premier added that "sufficient" cash will also be contributed alongside Apparel Brands.

Apparel Brands has a retail network of 717 stores across Australia and New Zealand, generating revenues of $845 million in FY23. However, revenue dipped 8.1% to $416 million in the first half of Premier's 2023-24 financial year (which ends on July 31).

The Apparel Brands chains are the worst-performing parts of Premier compared to the likes of Smiggle and Peter Alexander, which Premier is looking at selling or spinning off into listed companies after a recent strategic review.

Myer has indicated that it expects Century Plaza Investments Pty Ltd, the major investor in Premier and its Associates (Solomon Lew mainly), would be represented on the board of Myer if the proposal proceeds. Century Plaza has advised Premier that it will propose Chairman Solomon Lew join the board of Myer as a non-executive director in that case.

Lew has indicated that he would also be prepared to take an active role as a non-executive director of Myer if the transaction proceeds, given his extensive retail experience, that Century Plaza would become Myer's largest shareholder, and that Century Plaza's interests would be aligned with those of other Myer shareholders.

This would occur after the separation of Myer from Premier. Premier would distribute all its shares in Myer to Premier shareholders, resulting in Premier ceasing to own shares in Myer. After the proposed deal, Premier shareholders would become Myer shareholders directly, while also retaining their existing Premier shareholding.

Myer claims to have identified opportunities from a combination of the businesses to deliver a step-change in Myer's market position and generate substantial strategic and financial benefits. These include scale, revenue and growth opportunities, cost and revenue synergies across supply chain, sourcing, property and brand management, and the leveraging of Myer's loyalty program and e-commerce platform across an enlarged customer base.

In line with this approach, Myer has decided to retain ownership of its current brand portfolio, which includes iconic brands Sass & Bide, Marcs, and David Lawrence. These brands had been up for sale, according to industry and media reports, but with no takers.

Myer said it has formed an Independent Board Committee to consider the proposal. It will be led by recently named Executive Chair Olivia Wirth, as well as all of Myer's independent non-executive directors except Premier's nominee.