Australian media are reporting that giant Australian business Woolworths has become a takeover target, in the sights of United States private equity giant Kohlberg Kravis Roberts.

However, Woolworths isn't commenting on the speculation. The business has extensive business interests in New Zealand, including owning one of our biggest supermarket chains, Countdown, which has national coverage.

Many Countdown stores were previously called Foodtown but underwent a major rebranding.

Woolworths was also chaired by Ralph Waters, former chief executive then chairman of one of the largest NZX listed businesses, Fletcher Building.

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Woolworths and KKR both declined to comment on the media report, which follows a credit downgrade for Woolworths and 34 per cent share price decline since February 2015.

Auckland-based head of corporate affairs at Countdown, James Walker, referred questions about the takeover bid to Woolworths in Australia.

Private equity groups Blackstone and Carlyle were rumoured to have been looking at a move for Woolworths six months ago, and The Australian newspaper now says KKR has been running the numbers on Woolworths for a few weeks.

Woolworths is facing declining food and liquor sales amid strong competition in Australia from Coles and Aldi, while its failed Masters hardware chain and struggling discount retailer Big W are also weighing on its bottom line.

Scott Phillips from finance website Motley Fool said KKR were the "original barbarians at the gate". "These guys invented the private equity takeover and they're sniffing around Woolworths," he told 2GB's Ross Greenwood.

"It makes perfect sense. This is a high-quality business going through some temporary tough times. If you're spending US dollars you're getting a lot of Australian dollars for the benefit, and with the Woolworths share price so low it makes perfect sense they're sniffing around.

"This is one of the best retailers in the world, and it's got one of the best footprints, the best supplier negotiation teams in the trade. They really are a high-quality asset."
He said Woolworths was "dirt cheap" and "if you're a bargain hunter, like all investors should be, this is exactly when you should be looking at Woolworths - and KKR has the firepower".

"I have to believe its fixable," he said.

"Woolworths had its time in the sun while Coles was in trouble, Coles is now in the ascendancy and doing very well. Woolies still have millions and millions of us going through their stores every week spending plenty of money in their stores."

Woolworths' latest sales figures released earlier this month show the retailer is continuing to leak market share to Coles and Aldi, despite having invested more than $400 million in lowering grocery prices since 2015.

The retailer's food and liquor sales declined by 0.9 per cent in the third quarter, when the figures, released this morning, are adjusted to take Easter into account.

Woolworths said it would throw a further $150 million into lowering grocery prices to combat competitive market conditions.