Wesfarmers has enhanced its offer for the Australian retail group Coles by providing shareholders with a “mix and match” proposal, which gives them a choice to vary the proportion of cash they receive for their shares.
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The Australian conglomerate, which last month struck a A$22bn (US$18.8bn) with the Coles board to buy the retailer, has also issued an upbeat forecast for future dividends.
Under the “mix and match” proposal, Coles shareholders will be given the opportunity to choose from three forms of consideration.
Investores can choose from the “base offer” – the previously announced mix of consideration, being $4 cash and 0.2843 Wesfarmers shares for each Coles share.
Shareholders could also snap up the “maximum scrip” alternative – for Coles shareholders wishing to increase the scrip component of their consideration (to the extent possible based on the level of demand from other Coles shareholders for maximum cash).

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By GlobalDataWesfarmers also offered Coles investors a “maximum cash” alternative, for those shareholders wishing to increase the cash component of their consideration (to the extent possible based on the level of demand from other Coles shareholders for maximum scrip).
“We believe the mix and match proposal will be attractive to Coles shareholders,” said Wesfarmers managing director Richard Goyder. “Mix and match adds flexibility to the offer to address the particular preferences of individual shareholders.”
The move follows a decline in the Wesfarmers share price since it lodged its bid on 2 July which has effectively reduced the purchase price it was offering for Coles. Wesfarmers said last month that it was looking at ways to adapt the offer. The company said the changes to the payment scheme will not increase the overall value of the bid.
Wesfarmers also published dividend guidance for the first two years of its ownership of the retailer, stating that it expects to pay dividends in excess of A$2.00 (US$1.73) a share in the 2008 and 2009 financial years.
“The Wesfarmers board has decided to provide guidance to the market in relation to its future dividends to highlight the confidence the board has in the company’s outlook,” Goyder said. “We also believe that this strong dividend yield will be very attractive to Coles shareholders in their consideration of our acquisition proposal,” he said.
The Coles board said it would consider the revised proposal.
Wesfarmers also said it anticipates providing further information in relation to its proposed offer after the publication of its 2006/2007 results on 16 August.