Wesfarmers Leads $16B Bid for Coles
Tuesday April 3, 10:28 am ET
Coles Becomes Target of Takeover Bid With Proposal From Group of Investors Led by Wesfarmers
MELBOURNE, Australia (AP) -- A group of investors led by industrial conglomerate Wesfarmers Ltd. on Tuesday made a 19.68 billion Australian dollar ($16 billion) takeover bid for Australian retailer Coles Group Ltd., the biggest such bid in Australia.
Coles, the nation's second-biggest retailer, said it will enter into talks with the group, which also includes Australia's Macquarie Bank Ltd. and Permira Holdings, a European private equity firm. Wesfarmers has a 11.3 percent stake in Coles.
Analysts said a bidding war for Coles with a rival consortium that's led by U.S.-based Kohlberg Kravis Roberts & Co. and includes another five global buyout firms can't be ruled out.
Unveiled after the close of trading Tuesday, the Wesfarmers offer of A$16.47 a share is 8 percent above the cash bid put by the KKR group last October. KKR's A$15.25 a share bid was rejected as inadequate by the Coles board.
Coles said it expects to agree with the Wesfarmers group on "an accelerated timetable for due diligence" but also indicated it's willing to consider rival proposals for the company and its 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," Chairman Rick Allert said.
Wesfarmers Managing Director Richard Goyder said the Perth-based company has the skills to turn around Coles, citing its ownership of the Bunnings hardware chain, which ranks as Australia's third-largest retailer.
"We believe that a change of ownership will provide a catalyst for an improvement in performance," said Goyder.
Lured by undervalued assets in a sophisticated and profitable market, private equity firms have flocked to Australia in the past year and have been at the forefront of multibillion dollar acquisition sprees in the media, aviation and retail sectors.
According to data analysis firm Dealogic, the latest bid for Coles is the biggest buyout proposal on record in the Asia-Pacific region, beating the A$11.1 billion (US$9 billion) recommended offer for Qantas Airways Ltd. by a group including Macquarie Bank and TPG, formerly Texas Pacific Group.
Coles shares last traded at A$16.11 and were halted early Tuesday after Wesfarmers snared its 11.3 percent stake.
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