Blackstone, Bain Join KKR in Bid for Australian Retailer
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Blackstone Group LP and Bain Capital LLC are joining buyout firms Kohlberg Kravis Roberts & Co. and Carlyle Group to bid for Australian retailer Coles Myer Ltd., ending plans for a rival offer, four people with knowledge of the talks said.
Coles Myer, which owns supermarkets, Kmart stores, liquor outlets and gas stations across the country, has a market value of A$15.6 billion ($12 billion). The Melbourne-based company said August 22 that it received an unsolicited takeover bid.
Bain, based in Boston, and New Yorkbased Blackstone considered making a separate offer as recently as last week, said the people, who declined to be identified.Buyout firms led some of the biggest takeovers of American-based retailers in the past year, including the $17.4 billion acquisition of Albertsons Inc. and the $6.6 billion purchase of Toys ‘R’ Us Inc.
“Financial sponsors are looking for undervalued assets,'” said Pablo Mazzini, a London-based director at Fitch Ratings. They overhaul companies and then seek to sell them for “eight to nine times enterprise value. In retail, cash is king,'” he said.
Coles Myer has annual sales of A$34 billion and ranks as Australia’s secondlargest retailer after Sydney-based Woolworths Ltd.The takeover proposal is “highly conditional,” Coles Myer Chairman Rick Allert said August 22, without being more specific.
The bidding group includes KKR, Carlyle, Bain, Blackstone, Pacific Equity Partners, Newbridge Capital LLC, CVC Asia Pacific Ltd. and a unit of Goldman Sachs Group Inc., said the people, who declined to be identified because the names of the bidders haven’t been made public.
Deutsche Bank AG and Carnegie Wylie & Co. are advising Coles Myer, and UBS AG is advising the buyout firms.
Shares of Coles Myer rose 12 percent on August 17, when the company first said it had been approached. The stock fell 19 cents, or 1.4%, yesterday to A$13.07.
Scott Whiffin, a spokesman for Coles Myer, declined to comment, as did John Ford of Blackstone, Alex Stanton of Bain Capital and Andrew Cummins of CVC Asia. Richard Barton, a Hong Kong-based spokesman for KKR, and Katherine Elmore-Jones, a spokeswoman for Washington-based Carlyle, didn’t return calls to his office.
New York-based KKR, the world’s biggest buyout firm, agreed to acquire Sydney-based Brambles Industries Ltd.’s Cleanaway waste-management unit for A$1.83 billion in June. The purchase was KKR’s first in Australia and a record for a private-equity deal in the country.
Acquisitions of Australian retailers have surged 50 percent this year, led by TPG-Newbridge’s A$1.4 billion purchase of Coles Myer’s department store unit, data compiled by Bloomberg show. Buyout firms are attracted by an economy that is in its 15th straight year of growth.