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Wesfarmers offers A$21.9 billion for Coles

Australian conglomerate Wesfar-mers Ltd offered A$21.9 billion (US$18.6 billion) yesterday for retailer Coles Group Ltd -- the largest takeover bid in Australian history.

The mining, insurance and industrial giant offered A$4 cash and 0.2843 Wesfarmers share for each Coles share, valuing the retailer at A$17.25 per share, including a final dividend of A$0.25 per unit.

Coles chairman Rick Allert called the deal "a great outcome for Coles shareholders" and said the board unanimously recommended the offer.

"The recommendation from the Coles board is a big step towards helping end the uncertainty for shareholders, employees, suppliers and customers surrounding the company's ownership review," Wesfarmers chief executive Richard Goyder said in a statement.

Goyder said he expected the acquisition of Melbourne-based Coles to be completed by October.

If shareholders accept the deal, it will become the largest corporate takeover since the 2001 buyout of telecommunications company Optus by Singapore Telecommunications, or SingTel, for about A$14 billion.

The merged company would also rank among the top 10 companies on the Australian Stock Exchange by market capitalization and would place Wesfarmers ahead of Woolworths Ltd as the largest retailer in Australia.

Coles is the country's second-largest retailer. Its holdings include a nationwide chain of supermarkets and liquor stores, discount retailer Target Australia, stationery supplier Officeworks and Kmart Australia Ltd.

Coles put itself up for auction in February after slashing its profit forecast for this fiscal year by 10 percent on slowing sales at its core supermarket operations.

Wesfarmers was left alone in the bidding process after its private equity partner, London-based Permira, pulled out over the weekend, just before the bid deadline.

Coles' decision to put itself up for sale came five months after the board knocked back a A$15.25 per share offer from a consortium of six private equity firms led by New York-based Kohlberg Kravis Roberts & Co, which valued the company at A$18.2 billion. Coles had said the offer was too low.
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