Coles Myer is back in play

The shares of Coles, a large Australian listed retailer, jumped 8.6 percent in a single day to close at A$15.75 after the company said it was to “review ownership options,” four months after spurning the approach of a private consortium led by KKR.

Coles Myer, Australia’s leading retailer, is now up for grabs after lowering its future earnings forecast for 2008 by 10 percent from levels posted in September last year, when it said it would make a A$1.066 billion net profit after tax.

A month later Coles rejected a A$18.2 billion ($13.8 billion) takeover offer put forward by a private equity consortium made up of Kohlberg Kravis Roberts, The Carlyle Group, CVC, Texas Pacific Group and The Blackstone Group.

The listed retailer has now said it would “commence a process to review ownership options for the company and its businesses,” according to a statement filed with the exchange.

Rick Allert, Coles’ chairman said the decision to start reviewing ownership options for the company and its businesses was prompted by “a number of informal approaches to its advisers in recent weeks.”

The Coles board is advised by Carnegie Wylie & Company and Deutsche Bank, which have valued the retailer “substantially above A$15.25 per share,” the higher revised bid submitted by the KKR-grouping in October last year.

According to The Australian, a local newspaper, the original private equity grouping of KKR, Texas Pacific Group, Carlyle and CVC is back for a third time, this time without Blackstone. The same report also named CCMP as backing a separate approach.

Sources close to the private equity firms named said the latest development has been initiated by Coles, rather than financial sponsors, as the company is “desperate” to commence the sale process before an earnings report scheduled at the end of March.

Coles board could be investigated for the latest profit downgrade in the wake of legal action by Premier, its largest shareholder seeking to establish if the company directors “acted in good faith” when they indicated that a larger profit estimate was achievable last year, according to The Australian.

Premier has expressed concern over “inconsistent statements” from the board, and that Coles had changed its position about future profit growth only in response to the KKR consortium’s $13.8 billion offer, or what could have been the country’s largest corporate takeover.