Australian retailer Coles has seen its shares rise 1.88% today (22 March) as rumours flooded the market that the group is preparing to unveil a break-up plan when it releases its interim earnings results next week.
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Coles put itself on the block last month after warning that it would miss its fiscal 2007/8 proft guidance of A$1.07bn (US$863.33m) by 10%. Coles, it is believed, may have added as much as a 30% premium to the sale price as private equity and trade interest is peaked by the sell-off which is expected to raise A$20bn (US$16.14bn). It is believed that the group is planning to sell off its individual businesses separately in order to command the maximum price.
Various trade and private equity groups are expected to be involved in the bidding process. A consortium led by Kohlberg Kravis Roberts (KKR) made an unsuccessful bid for Coles last year. KKR is now among the favourites to end up with a piece of Coles. Texas Pacific Group, which led the syndicate that acquired the Myer department store chain from Coles for $1.4bn last year, is also believed to be interested.
Among trade groups reportedly eyeing Coles supermarket business is the UK’s Tesco. The group declined to comment on the rumours today. Meanwhile Woolworths, Australia’s largest retailer, is rumoured to be interested in Woolworth’s Target unit.
Coles shares increased from an opening value of A$15.68 to close at A$15.96 on the Australian stock exchange today.
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