Bid for Coles is 'highly conditional'

Australian retailer Coles Myer confirmed it had received a takeover proposal from a group of private investment funds but offered no details, leaving its shares flat and investors guessing.

The company, which said the proposal was "highly conditional", did not name the members of the consortium.

Coles, which has a market value of around A$16 billion ($19 billion), said the group would not go ahead with the bid without the Coles board's support.

Coles, Australia's second-largest retailer after Woolworths, had flagged the approach last Thursday. Coles Myer chairman Rick Allert said yesterday the company would respond to the bid in due course.

Market sources said on Friday that private equity firm Kohlberg Kravis Roberts had teamed up with Newbridge Capital, the Asia-Pacific investment arm of TPG-Newbridge, and others to bid for Coles.

"We are just looking for a clearer outcome to the process, either from a bidder, and a figure being put on the bid price, or a firm response from Coles, how the board plans to extract shareholder value, said Atul Lele of White Funds Management.

"It is still uncertain whether the bid will go through or not. Private equity firms don't tend to want to be hostile bidders. And in such circumstances, it is better to have the support of the board and shareholders."

Shares in Coles Myer closed down 0.5 per cent at A$13.33. They hit a record A$13.82 last Friday.

Any takeover of Coles by buy-out funds would be Australia's biggest private equity transaction by far, topping KKR's purchase earlier this year of two Brambles Industries businesses for A$1.83 billion.

- REUTERS