David Jones boss Paul Zahra says Myer is going to have to pay the "maximum" price if it wants a $3 billion merger of the department store chains to go ahead.
Mr Zahra yesterday said Myer's proposal did not represent paying a premium for his company. David Jones has appointed consultants Port Jackson Partner to consider the offer, which would see shareholders swap their stock for Myer shares.
"On a nil premium, it doesn't make sense right now but of course, we need to go and do all of the work," he said. "It's got to be the maximum price."
The David Jones chief executive said while one could not expect customers to gravitate from one brand to another, the merger might result in store closures.
Myer has 67 stores nationwide, while David Jones has 38. "Any merged group could have less stores overall," Mr Zahra said. "That could be a possible outcome."
He said the consultants would look carefully at Myer's offer, including its claim a merger would save the combined companies about $85 million a year.
He said David Jones had come up with about half that figure when it studied a possible merger in 2011. David Jones dismissed an approach from Myer in November last year, saying the share-swap deal did not represent fair value.
Myer resubmitted the proposal in February.
David Jones yesterday reported a 4.6 per cent drop in half-year net profit to $70 million, mainly due to a fall in financial earnings related to a flagged change in a deal with American Express.
Department store earnings grew more than 8 per cent to $92 million, following a 3.8 per cent hike in sales.
Mr Zahra said a fall in the Australian dollar to about US91Â¢ had turned customers away from international websites.
"We've seen that as the dollar has fallen below parity with the US, shopping on an offshore website has become less interesting for our customers," he said.
"So we have seen a lot of customers return to shopping with us and, of course, now we've got our own online business that allows us to compete head to head."
David Jones relaunched its online store last year and has a goal of increasing web sales from 2 per cent to 10 per cent of total sales within four years.