KKR to rejoin A$20bn Coles bidding war(2)

Shares in Australian retailer Coles Group continued to climb as a A$20 billion bidding war between local rival Wesfarmers, a Kohlberg Kravis Roberts-led buyout consortium, and other international trade players looked increasingly likely.

Australia’s biggest ever buyout looks set to become even bigger, after a Kohlberg Kravis Roberts-led consortium confirmed its ongoing interest in Coles Group, the country’s second biggest retailer. This has increased the chances of a A$20 billion (€12.3 billion; $16.5 billion) bidding war between trade buyers and private equity groups.

Coles Group

Coles, which rejected a A$19.7 billion offer from rival retailer Wesfarmers over the weekend, said the KKR-led group had confirmed its continued interest in buying the company and was confident of matching or beating Wesfarmers’ A$16.47 per share bid. It has already made two previous bids at A$14.50 and A$15.25 per share.

The board, which has successfully used its “go-shop” period to attract interest from both trade buyers and private equity groups, welcomed the ongoing participation of the KKR-led consortium and said that it would open its books to both groups.

Wesfarmers also restated its interest in the retailer following the board’s statement. As an Australian buyer and Coles’ biggest shareholder – having built up a 12.8 percent stake – it remains in a strong position. Its group also includes buyout firms Permira and Pacific Equity Partners, and Australian bank Macquarie.

Other bidders may also emerge. According to media reports, fellow Australian retailer Woolworths, UK retail giant Tesco, and French chain Carrefour are all exploring potential bids, possibly in conjunction with buyout firms.

The competition increases the likelihood of a bidding war, which is likely to send the price of the company above the A$20 billion mark.

Investors are already betting on a higher bid. Coles shares are currently trading at a A$17.38, well above the current offers and more than 60 percent higher than eight months ago. This gives the chain a market capitalisation of A$20.8 billion.