Buyout giants pull out of race for Coles(3)

TPG, Carlyle and Blackstone have pulled out of the formal race for Coles, an Australia-listed retailing group, but their consortium has indicated an interest in discussing an alternative investment structure.

TPG Capital, The Carlyle Group and The Blackstone Group have pulled out of the formal auction for Coles, Australia’s second largest retailer, leaving a  consortium led by Perth-based Wesfarmers as the only remaining bidder. Wesfarmers’ partners are Permira, Pacific Equity Partners and Macquarie Bank.

The withdrawal of the three private equity groups, ahead of the 30 June deadline, has been widely predicted since original consortium partners CVC Asia Pacific and Kohlberg Kravis & Roberts pulled out of the group at the end of May. Bain Capital is understood to have pulled out too.

According to a source, two consortium members dropped out shortly after CVC and KKR but their departures had not been confirmed until the latest exchange filing by Coles.

The brief statement said: “TPG, Carlyle and Blackstone have advised today that they will not be submitting any offer or proposal in relation to the company on Saturday June 30, 2007.”

“However, the consortium has also advised the company that it has not withdrawn from the process, and that it has indicated an interest in discussing with Coles an alternative investment structure.”

The buyout process of Coles emerged after the retailer spurned the first approach by the TPG consortium on the grounds that their offer was too low. Coles subsequently put itself up for sale after failing to meet earnings forecasts, and Wesfarmers, which had built its stake in Coles to 12.8 percent, decided to partner with private equity to buy the remaining shares.