Coles Group revealed today (17 May) that it has reached a confidentiality agreement with Wesfarmers, meaning that Australia’s second-largest retailer moves closer to opening its books to the buyout consortium.
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Wesfarmers proposed a takeover bid of A$19.7bn (US$16.2bn) for the company in April. It is one of two investment groups to have tabled official offers for the Coles businesses. The other group, a private equity syndicate led by KKR, has already gained access to the data room.
Wesfarmers will be provided with access to due diligence materials on Friday 25 May.
In an announcement to the Australian stock exchange, Coles told investors that the sale process was progressing well. The group has set a deadline of 25 June to receive final bids.
In a separate announcement today, Coles reported a 0.6% increase in third quarter sales, which rose to $8.4bn. Food and liquor sales increased by 3.2% in the 13 weeks to 29 April, with same-store sales up 0.8%.
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By GlobalDataGroup CEO John Fletcher said that the results were in line with expectations as the business developed initiatives to rebuild sales momentum in its supermarket unit over the next two quarters.
“As anticipated at the half-year, comparative sales growth declined in supermarkets, primarily due to the Bi-Lo conversion program, but has now stabilised. Although initiatives to improve the supermarket fresh and value offer are having an early positive impact, they were introduced too late in the quarter to be reflected in this result,” he commented.
“However, the worst is now behind us and we look forward to a gradual improvement in sales in the fourth quarter and beyond,” Fletcher added.
