Buyer Takes Stock On Coles Bid

WIDESPREAD confusion about the status of the multibillion-dollar auction of Coles Group has prompted Australias leading shareholder lobby to call for the retailers shares to be suspended from trading.

Concerns that investors were being kept in the dark about the sale of their company emerged yesterday after Coles publicly denied blanket media reports claiming that an international private equity consortium led by Texas Pacific Group had withdrawn from the bidding process.

Coles shares slumped regardless — almost 3 per cent during early trading. It was the second time in weeks that Coles shares have been battered by speculation about the consortiums dwindling interest in an acquisition, and the retailer has yet to publicly acknowledge the recent withdrawal of three members of the group, including US buy-out giant Kohlberg Kravis Roberts.

Australian Shareholders Association chief executive Stuart Wilson told BusinessDay that if Coles was unable to keep the market fully informed about the movements of third-party bidders, it should request a trading halt.

"Once it reaches the stage where bidders are brought in and books are opened … there are so many parties with different agendas involved so it may well be in the best interests of shareholders to suspend trading until an outcome is reached," Mr Wilson said.

"Given the share price movements that have coincided with the KKR withdrawal, and then the more recent rumours about the withdrawal of other parties, it is clear that this information is market sensitive."

Coles shares closed down 35¢ to $16.55. However, the share price dipped as low as $16.43 — beneath the $16.47-a-share indicative offer made by Wesfarmers and its investment partners in April.

Wesfarmers plans to make a formal offer to Coles by the June 30 deadline.

As most newspapers reported yesterday, the TPG-led consortium had apparently made a decision to pull-out of the Coles sale as a result of a break down in negotiations with Woolworths, which was considering a joint bid.

Woolworths is interested in Coles Groups Target and Officeworks chains and continues to consider its bidding options.

TPG and consortium partners Carlyle and Blackstone Group had planned to advise Coles of their withdrawal yesterday morning.

However, several sources last night claimed that it was unclear whether TPG had in fact withdrawn, or decided to remain in the process.

In a carefully worded statement, a spokesman for the consortium said: "We have not announced we are withdrawing." He denied to comment further.

Coles own public statement claimed that it had "not been advised of the withdrawal of any party involved in the ownership review".

A spokesman for the Australian Securities Exchange said that Coles had so far met its continuous disclosure obligations. However, the takeover situation was continually being monitored, the spokesman said.

Coles shares have retreated from a record high of $17.89 last month, with hedge funds leading a sell-down as the prospect of a competitive auction diminishes.

Barclays Group has almost completely sold the 5 per cent stake it had built in Coles earlier this year.

Link: http://www.asa.asn.au

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