An attempt by Wesfarmers to snatch a greater stake in Coles Group has failed and lifted the potential bid price closer to $18 a share.
Wesfarmers bid big shareholders $17.25 Tuesday night for its shares and was rebuffed. Yesterday the market took the shares to a high of $17.80 and they settled back around $17.72, up 45c, on around 7 million or so shares.
At this level Coles Group is valued at around $21 billion and at $18 a share it would be well over that figure.
It was a message to its rivals that the cost of playing in the Coles takeover game had just gone up by around $1 billion.
Wesfarmers seems to have tried to buy more shares to add to its 12.8 per cent stake to put pressure on Coles management who have been negotiating with other possible bidders including the KKR buyout group and possibly UK retail giant, Tesco and Woolworths.
The presence of Tesco is not firm as it knows it will be attacked by the far tougher UK funds management industry if it finances a multi-billion dollar bid for Coles instead of spending that money on expanding in Asia, especially China.
Woolworths faces a dilemma: Tesco would be a formidable competitor in Australia and by scheming with it Woolies could be ruining its dream run here: that’s unless the link up with Tesco is a temporary deal just to get control of Officeworks and Target, with Tesco then onselling the other businesses.
Investors in Woolies would react adversely if the retailer did a deal that allowed Tesco into the Australian market.
Woolies shares would be sold off. That’s why a link with Tesco looks a partnership of convenience rather than anything else.
Wesfarmer’s shares rose 10c to $39.05, despite the blow to its corporate scheming and the cuts to its coal operations in NSW.
……………………….
Meanwhile Airline Partners Australia had some good news to report: its total stake in Qantas rose by some 8.6 million shares to 25.94 per cent from 25.51 per cent.
The number of shares in the Institutional Acceptance facility fell sharply to 164.8 million from 256.8 million and the number of shares now actually covered by real acceptances rose by 100,000 million to 349.66 million from 248.4 million.
So the rise really was due to a reshuffle of holdings by some big holders and the flow of acceptances from smaller shareholders.
APA has to double its stake in the next three days to be in a position to have more than 50 per cent of Qantas by 7pm Friday and give itself an extra two weeks to get to 70 per cent.
Qantas shares rose 4c to $5.34 on more than 64.8 million shares. It’s going to be a close run thing for APA, and Friday could see tens of millions of dollars of shares traded.
……………
Meanwhile Telstra shares have continued the rebound after the fall of the past couple of weeks.
The shares peaked at $4.96, then fell by more than 30c before steadying then recovering. Yesterday TLS rose 9c to $4.85 on more than 40 million shares.
A presentation to an investment conference on Wednesday by Chief Financial Officer, John Stanhope seemed to confirm that the Telco’s recovery was still on track.
