U.S. News

Bain Capital Joins KKR Team for Coles Bid


Global private equity firm Bain Capital has joined a consortium led by Kohlberg Kravis Roberts which is looking at bidding for Australian retailer Coles Group, a source familiar with the situation said on Tuesday.

Bain's inclusion brings the size of the KKR consortium up to six members, a move expected to further anger Coles which wants to limit the size of bidding parties to four to increase competition in the sale process.

Bain had previously teamed up with buyout partner Pacific Equity Partners (PEP) to look at Coles when it put itself up for sale last month, but the two parties disagreed over valuations, the source told Reuters.

PEP is not part of the new KKR consortium which also includes Caryle Group, CVC, Texas Pacific Group and Blackstone Group, the source added.

Coles, which rejected an A$18 billion (US$14 billion) offer from a similar consortium last year, announced last month it would open its books to potential buyers and would consider a full sale or break up.

Coles' board has not yet approved details of how a sale will be conducted but its advisers -- Carnegie Wylie and Deutsche Bank -- are determined to limit the size of the consortiums.

KKR has warned Coles it may walk away from a bid if a limit is imposed, arguing the six parties which were part of last year's group all had access to the KKR model and confidential details of how it would structure any transaction.

"There is a real problem with its (Coles) attempts to limit the numbers and it may well knock out the consortium because they have to do it with the six members that are being discussed," the source said.

"All of those people have access to the KKR model and how they will structure the transaction and what they will do with Coles if they bought it. Coles also expects to attract interest from most major private equity firms and retailers globally.

Analysts have said international retailers such as Wal-Mart or Britain's Tesco might also be interested in Coles' main supermarkets business, while rival Woolworths may be interested in
Coles' A$1 billion Officeworks chain. A spokesman for Tesco in London declined to comment.