Wesfarmers, Australia's biggest home-improvement retailer, is to buy Coles Group for A$22 billion ($24.4 billion) - a record for an Australian takeover.
Wesfarmers was the only bidder for Coles' 3000 supermarkets, Kmart and Target stores, liquor outlets and office supply stores after private equity firms Kohlberg Kravis Robertsand TPG dropped out of the auction.
Wesfarmers already owns 12 per cent of Coles after buying a stake in April at A$16.47 a share. Coles shares closed June 29 at A$16.12.
Coles shareholders will now get A$17.25 in cash and stock, 7 per cent more than Friday's closing price.
The shares have fallen 10 per cent from a record A$17.95 on May 14 as the prospects of a bidding war diminished.
Wesfarmers chief executive Richard Goyder decided to proceed with a bid for the larger company after buyout partners Permira and Pacific Equity Partners withdrew just before the deadline for offers.
Under his original proposal, Wesfarmers would have taken control of Target and Officeworks and held a 50 per cent stake in the supermarkets, Kmart, liquor and fuel outlets with the buyout firms.
A spokesman said Wesfarmers was still talking to London-based Permira and Sydney-based PEP about alternative roles in the bid.
PEP last year backed a failed bid by Stephen Tindall to buy back The Warehouse. There is speculation in the market that PEP may yet make another bid for The Warehouse.
Coles chief executive John Fletcher put the company up for sale in February after a A$910 million programme to increase sales by rebranding most Bi-Lo discount supermarkets and Kmart stores under the Coles name and opening "supercentres" combining groceries with discount departments stores failed.
