Good morning,

On Monday, we reported that billionaire businessman Solomon Lew could see a windfall of some $500 million in the Premier Investments break-up. That was based on valuations quickly calculated by Unified Capital Partners, a breakaway group from mid-tier stockbrokerShaw and Partners. It estimated that Smigglecould be worth $1.19 billion, Peter Alexander$1.59 billion, and the remaining apparel brands $915.5 million. Adding the property holdings, Premier’s massive cash pile, and its stake in Myer and Breville, and Unified reckons the entire company potentially could be worth more than $33 per share (they closed on Tuesday at $25.53).

Not everyone is so sure. A similar sum of the parts valuations by brokers at Barrenjoey and JP Morgan paints a more varied picture. At the former, emerging companies analyst Aryan Norozi handed Smiggle a $1.09 billion valuation, Peter Alexander a $1.03 billion valuation and the rest of the brands some $505 million. JPMorgan’s Bryan Raymond says Smiggle could be worth $864 million and Peter Alexander $1.18 billion.

So, how did they get to such different valuations? There’s no easy answer, but you have to recognise it is all largely finger-in-the-air stuff and involves a bit of guesswork.

But we can take something from the analysis. With a 20-times earnings multiple, Barrenjoey is essentially applying a luxury multiple to Smiggle – a kids’ stationery shop that’s more like Cotton On than LVMH (which trades at 24-times profit). Then again, another growth retailer, Lovisa, trades at more than 30 times profit and no one is accusing it of being luxury!

All that matters, for now, is that Premier’s major shareholder thinks the sum of its parts is worth more than the whole. What he (and UBS) end up extracting will be closely watched.

Happy reading,

• Yancoal Australia appears to be cooling on its interest in two major Queensland coking coal mines being sold by BHP, according to various sources in the bidding process which is rapidly coming to an end.
• The New Zealand Breakers, a top-tier team in the National Basketball League, are in talks with MA Moelisto bring the investment bank on as a strategic adviser as sporting M&A action heats up.
• FTI Consulting has kicked off a sales process for wood pellets maker Altus, which landed in receivership last week. Bidders have until September 15 to lob indicative offers.
• ASX-listed traffic management operator Avada Group is back on the acquisition trail, inking a binding agreement to pick up the assets and business operations of STA Traffic Management.
• National Australia Bank’s latest hybrid issuance had gathered $1.45 billion in bids by the early hours of Tuesday morning, as investor demand outstripped the $1 billion expected deal size at launch.

BHPreported a 37 per cent slump in underlying profit to $US13.4 billion on Tuesday driven by weaker prices for iron ore, copper and coking coal, plus a rare decline in sales volumes of its flagship product, West Australian iron ore. The mining giant has put two of its coal mines in Queensland up for sale.

• ASX futures down 22 points or 0.3% to 7054 near 6am AEST
• AUD +0.1% at US64.21¢
• Bitcoin -1.1% at $US25,817
• Dow -0.6% S&P -0.3% Nasdaq flat
• FTSE +0.2% DAX +0.7% CAC +0.6%
• Gold +0.1% at $US1897.24 an ounce
• Brent oil -0.5% to $US84.02 a barrel
• Iron ore +3.0% to $US110.65 a tonne

Australian shares are set to open lower as Wall Street struggled before Nvidia’s pivotal earnings report. ASX futures were down 22 points or 0.3 per cent to 7054 near 6am AEST. Wednesday’s reporting schedule includes: APA Group (APA) | Corporate Travel (CTD) | Domino’s Pizza (DMP) | HMC Capital (formerly HomeCo) (HMC) | IDP Education (IDP) | Iluka (ILU) | Karoon Energy (KAR) | The Lottery Corporation (TLC) | Pepper Money (PPM) | Perpetual (PPT) | Qualitas (QAL) | Santos (STO) | Siteminder (SDR) | WiseTech (WTC) | Woolworths (WOW) | Worley (WOR). On Wall Street, Nvidia shares touched an intraday record signalling investor optimism before the chipmaker’s highly anticipated earnings report. (Read more online.)

• Microsoft’s $US69 billion Activision Blizzard acquisition is back in play after the tech giant submitted a different deal to the UK’s antitrust watchdog, Bloomberg reports.
• Nvidia shares touched an intraday record on Tuesday (early Wednesday AEST), signalling investor hopes before the chipmaker’s highly anticipated earnings report, Bloomberg reports.
• Private equity-owned healthcare software firm Waystar has tapped banks for an initial public offering that could see the company valued at $US8 billion, according to Reuters.
• Lithium producer Allkem has posted a record profit ahead of the vote on a merger with downstream processing specialist Livent, The Australian Financial Review’s Brad Thompsonreports.
• Goldman Sachs is exploring a sale of an investment-advisory business it bought four years ago, according to Bloomberg.