Aussie Retail Giant Ups Drawbridge Against US Bid

24 August 2006

SYDNEY: Lights burned through the night Tuesday as the board of Australia's second largest retail group, Coles Myer, readied the company for a bruising poker game with four US private equity predators.

Led by Kohlberg Kravis Roberts, the original Barbarian at the Gates, the consortium comprises Carlyle Group, Newbridge and CVC Asia Pacific.

Coles chairman Rick Allert assured stockholders in a two-page letter that the company will "not be pressured by market speculation" to act against the interests of its shareholders. He stressed the tabled offer was "highly conditional".

He also revealed that the consortium has undertaken not to proceed with its offer - thought to be in the region of around A$14 a share - without the full support of Coles' board. Aussie cynics, however, take this assurance with a large pinch of salt.

The Australian flag has already been waved in the defensive effort. Says Rob Patterson, managing director of one of Coles' top twenty stockholders Argo Investments: "We'd prefer not to see the company lost to the Australian market and therefore the offer would have to be substantial for us to want to accept it,"

Australian Foundation Investment Company's general manager Geoff Driver, however, takes a more pragmatic view and would likely sell if the consortium ups its offer. "We believe there is some more value [in Coles]," he said, adding that he would "wait and see".

Coles' next scheduled board meeting is in one month

Data sourced from Sydney Morning Herald; additional content by WARC staff