Coles, Australia’s second largest supermarket group, has received a A$19.68bn (US$16.04bn) takeover approach from a consortium of private equity investors led by Wesfarmers, which holds an 11.3% stake in the group.
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The syndicate, which is made up of Wesfarmers, Permira and Macquarie Bank, unveiled an offer after close of trade yesterday (2 April) of A$16.47 per share.
This represents an 8% premium on an approach made last October by a consortium spearheaded by Kohlberg, Kravis & Roberts (KKR) of A$15.25. Although this was rejected as inadequate by Coles, the KKR group has been viewed as a frontrunner in the race to seize control of the struggling retailer’s assets.
Coles chairman Rick Allert said that the group was in the talks with Wesfarmers to agree and accelerated timetable for due diligence, but also indicated that it is still willing to consider rival proposals for the company or individual businesses.
“The level of interest in these assets remains high and we are committed to maximizing value for our shareholders by continuing to run a competitive process,” Allert said in a letter to shareholders.
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By GlobalDataWesfarmers managing director Richard Goyder said the Perth-based company has the skills to turnaround Coles, citing its ownership of the Bunnings hardware chain which ranks as the nation’s third largest retailer.
“We believe that a change of ownership will provide a catalyst for an improvement in performance,” said Goyder.
If accepted, the agreement would allow shareholders to choose between an all cash offer or a mix of cash and Wesfarmers scrip.
