$700m tag on Myer stores By Stephen McMahon November 8 2005
The founding Myer family and several other interested parties are expected to belatedly receive an information memorandum on the sale of the Myer department store this week.
This follows their omission from the original group, who received financial details late last week. There are now about 20 prospective buyers.
The delay was due to some parties raising concerns about the terms in the confidentiality deed they had to sign before receiving the information memorandum.
Sources close to the negotiations said parent group Coles Myer had placed an internal valuation on the Myer chain of $700 million-plus, despite industry analysts saying Myer was more likely to fetch a price in the region of $400 million. The retail group is expecting to receive several "indicative bids" for the 61-store Myer chain early next month.
The list of bidders is topped by private equity firms such as CVC Asia Pacific, the Carlyle Group, JPMorgan Capital, Castle Harlan Australian Mezzanine Partners (Champ), Newbridge Capital and US giant Kohlberg Kravis Roberts.
Other potential buyers include South African retailers Truworths and its compatriot Edgars Consolidated.
Former Coles Myer chairman Solomon Lew, who has a 6 per cent stake in Coles Myer, is also believed to be looking at either a stand-alone bid or to work in conjunction with one of the private equity firms.
Domestic retail rivals including David Jones and Harris Scarfe are also believed to be potential buyers.
Analysts, however, said Myer's reported loss of $15 million for the second half of 2005 and a margin of only 1.25c in every dollar spent at the store - far below the top international standard of nearly 6 per cent - would make it difficult for Coles Myer to achieve its target price.
Coles Myer shares dropped 18c to $10.02 yesterday.
CML Price at posting:
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