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Blackstone not interested in Australia’s Woolworths

TPG, Carlyle and KKR are reportedly among the global private equity firms interested in Big W, the discount arm of Australian retailer Woolworths.

The Blackstone Group is not interested in acquiring Australian retailer Woolworths, either in its entirety or a unit, despite media speculation it is among global private equity firms looking at the company, it is understood.

Media reports said that Blackstone and The Carlyle Group had approached Woolworths about a potential takeover of the entire AUD 30 billion ($22 billion; €20.5 billion) supermarket chain.

TPG Capital has also been tipped as a potential bidder for Woolworth’s discount chain Big W and there has been speculation that it also would submit a joint bid with Blackstone.

Reports speculated that Big W could be worth about AUD 1.5 billion.

KKR has also been mentioned as a potential bidder for either the entire group or for the Big W division.

None of the private equity firms or Woolworths would comment on the likelihood of a potential deal.

However, according to a senior executive of one regional mid-market private equity firm, a takeover of Woolworths would only be possible by a large global private equity firm. Moreover, if a deal were to go through it would be one of the largest in Australia’s corporate history.

Another senior executive also observed that the number of public companies in Australia that have gone private is quite low compared with other markets. “The deal also is a very interesting one to keep an eye on,” he said.

This is not the first time major private equity names have been linked to an Australian retail deal. In 2006, KKR led a group of buyout firms including CVC Asia, TPG, Blackstone, Carlyle and Bain Capital that offered $18 billion for Australian retailer Coles Group. That business was ultimately bought by Wesfarmers. The transaction remains the biggest private-equity deal ever proposed in Australia.

Big W operates 184 discount stores across Australia and has suffered a recent slide in market share and an unsuccessful roll-out of a logistics platform.

The unit accounts for 6.8 percent of Woolworths’ annual sales for the past financial year ending in June. The discount chain’s operating income for the year fell 25 percent to $114.2 million. Its main rivals are Kmart and Target.