The board of Australian retailer Coles Group has accepted an enhanced A$18.2bn ($15bn) takeover bid from diversified conglomerate Wesfarmers. The acceptance by the Coles board follows a restructuring by Wesfarmers of the equity element in the offer.
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Wesfarmers said the enhanced proposal is designed to give Coles’ shareholders greater certainty about the value of its proposal in the “current environment of market volatility”. A drop in the Wesfarmers share price after it first lodged its bid on 2 July had put the acquisition in doubt. Wesfarmers said greater certainty for Coles shareholders could be achieved through the price protection being provided for half of the share component of the offer.
Under the new terms, Wesfarmers will pay $4 in cash, 0.14215 of one of its own shares, and 0.14215 in a new vehicle called Wesfarmers’ Price Protected Shares (WPPS) which will be listed on the stock exchange.
“After an extensive review of all ownership options, including break-up, the board believes that the acquisition of Coles Group by Wesfarmers in a whole of company transaction is the best outcome for Coles Group shareholders, employees and other stakeholders,” Coles chairman Rick Allert said. “The Coles Group board unanimously believes shareholders should support the proposal as providing an opportunity to participate in the future growth of the combined Wesfarmers/Coles Group.”
Wesfarmers managing director Richard Goyder said: “This modification of our offer reflects our confidence in the value of the transaction to shareholders of both companies. We are confident that the improvement we will bring to the Coles’ businesses, in conjunction with our existing businesses, will be reflected in a strengthening share price.”
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By GlobalDataWesfarmers said it intended to send out the official offer booklet in early October and the shareholders’ meeting, where the deal will be voted on, is to take place in early November.
