Coles Myer, an Australian retailer, said in a filing to the exchange it has received a “highly conditional proposal” from a consortium of leverage buyout funds that would only proceed to takeover the retailer with the support of the company’s board.
The consortium is believed to comprise of KKR, CVC Asia Pacific, The Carlyle Group, and TPG-Newbridge. Goldman Sachs has been linked to the quartet. The takeover offer has been estimated to be worth A$16 billion. UBS is believed to be advising the KKR group.
In the statement issued 22 August, Coles Myer chairman Rick Allert said the board has appointed Australian investment bank Carnegie, Wylie & Company, Deutsche Bank and Freehills, a law firm, to advise in its consideration of the proposal.
“The Board will undertake proper consideration of the proposal and will not be pressured by market speculation to take actions which would not be in the best interests of shareholders.”
The unsolicited offer is reported to have sought conditions that included an “exclusivity agreement” that the board has already rejected, even though the door has been left opened for further negotiations, according to local media reports.
In a letter to its shareholders, Coles Myer outlined that for July 2001 to 2006, profits and return on investments have doubled, share values have risen 90 percent, and the company has returned more than A$3.3 billion to shareholders through capital management initiatives and dividends.
Grant Saligari, senior equities analyst at Australia’s CommSec, the securities arm of Commonwealth Bank said: “The tone of the statement indicates the company is not overly receptive to the approach, and the appointment of advisors would suggest that they are looking at a defence.”
Coles Myer shares fell for the second straight day to A$13.26 today, after shedding 7 cents 22 August to A$13.33 at the close of trading in Sydney. The company’s shares have gained 13 percent since 17 August, when the company first said it had been approached.
Another consortium made up of Bain Capital and The Blackstone Group is reportedly keen on making an approach in the event the KKR-led takeover bid is rejected.