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predators form one pack Coles Myer rockets as predators form one pack for the hunt
Email Print Normal font Large font Kirsty Simpson
August 26, 2006

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AdvertisementCOLES Myer shares soared to fresh heights as the retailer's would-be predators combined forces.

US-based private equity firms Blackstone Group and Bain Capital, and Australia's Pacific Equity Partners, are believed to have joined forces with a Kohlberg Kravis Roberts-led consortium to court Coles Myer.

A spokesman for KKR refused to comment on the regrouping, but it is believed to have been formed after an approach by KKR during the week. The Blackstone Group initially considered making its own bid for Coles, after news of KKR's offer broke a week ago.

The merger of the two groups will put even greater pressure on the Melbourne-based retail giant as it works out a defence strategy, although Coles Myer had said that the consortium had given an undertaking not to proceed with a takeover offer without co-operation from the board.

Expiring monthly Coles call options and speculation about the news prompted renewed interest in the shares, which closed at a record yesterday, up 73¢, or 5.6 per cent, at $13.80, beating the previous high of $13.45 a week earlier.

Almost 26 million shares changed hands, the highest volume traded since news of a potential takeover bid first broke.

The flurry of activity sparked another round of speculation about an imminent bid. ABN Amro Morgans private client adviser Simon Ferguson said the big Coles Myer share price rise could be a sign the private equity players were close to bidding. Other market sources were also expecting a bid over the weekend, possibly at $14.50 a share.

Analysts are expecting that any takeover would involve splitting Coles, which has its supermarket chain, Target, Officeworks, Kmart, Bi-Lo and numerous liquor outlets. (Coles Myer was already planning to streamline its brands, keeping only Coles, Target and Officeworks — a strategy criticised by market analysts.) Earlier this year Coles sold its Myer department stores for $1.4 billion to a consortium led by Newbridge — now in the group bidding for Coles. With

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