Coles Australia Plans Three-Way Sale Split
Takeover target Coles Group, Australia's second-largest retailer, will be sold in three separate lots in an auction designed to maximize sale price, The Australian Financial Review said on Thursday.
The retailer, which is being eyed by a consortium led by private equity giant Kohlberg Kravis Roberts, is expected to formally approve the A$20-billion-plus (US$16 billion) sale process at a board meeting on Friday, the newspaper said in an unsourced report.
A Coles spokesman said only: "The sale process is underway," and that company policy was not to comment on press speculation.
Discount supermarket store Target is to be offered in one lot, stationery and business supplies group Officeworks as another, while the Coles supermarkets, liquor division and Kmart general merchandise outlets will be combined as the largest offering, the paper said.
This would avoid the prospect of a single private equity buyer snaring a "bulk discount" through a bid for the entire company, it said.
KKR, which now leads a consortium of six private-equity players considering bidding for Coles, has angered the retailer which wants to limit the size of bidding parties to four to increase competition in the sale process.
A source familiar with the situation told Reuters that KKR would still take a look at all three divisions if they were auctioned separately.
The consortium includes Carlyle Group, CVC, Texas Pacific Group, Blackstone Group and Bain Capital.
Bidders will still be able to make offers for the entire company, but only via separate proposals of each of the three asset parcels, the newspaper said.
Coles expects to attract interest from domestic and international retailers. However, approaches to French retail giant Carrefour and Tesco in Britain were unsuccessful, one source said. Woolworths has said in the past it is interested in Coles' A$1 billion Officeworks chain.
Coles rejected an A$18 billion buyout offer from a consortium led by KKR last year.
A clearer picture of Coles' sales troubles will be revealed on March 26, when the retailer is due to report first-half results.
The company could announce sale protocols at the same time, which would help deflect attention from what is expected to be a weak result in the core supermarkets business.