Another multi-billion dollar takeover offer pushed by American private equity firms has collapsed.
Six weeks after the $11.1 billion Australian/US/Canadian offer for Qantas failed, the $20 billion contested takeover battle for Coles was over last night
The attempt to snare troubled retailer, Coles Group, by American buyout firms failing with the last three, TPG, Carlyle and Blackstone, quitting the race after a disagreement with Woolworths.
It leaves only Wesfarmers, and its group of private equity and investment banking partners, as the only bidder at $16.47 a share.
The US buyout firms withdrew after talks with Woolworths on some sort of joint offer reportedly collapsed.
The original Coles bidder, KKR of the US, plus two others, CVC Asia and Bain Capital, had earlier withdrawn from the process after early work on Coles' books threw up information they didn't like.
The remaining buyout firms would have needed Woolworths alongside to offer its shares to accepting Coles holders in any offer. That would have enabled them to offer the Coles shareholders the option of rolling over their capital gains tax liabilities.
But media reports this morning say that Woolies wouldn't stump up the required amount of money for the assets it wanted in any winning offer, thereby limiting the number of shares the TPG group could offer.
Coles is now likely to think about a break-up of the group to encourage Woolies to stay in the bid against Wesfarmers.
But analysts were not holding out hopes of success for that tactic last night because of the difficulties involved.
The TPG group had been under pressure to do a deal with Woolies after Wesfarmers suggested it could boost the scrip component of its offer from 25 per cent, to 40 per cent.
That has seen the WES shares rise by more than $6 in the past week as big investors rushed to rebalance their portfolios ahead of any deal. That drew a query from the ASX to WES about the strong price rise.
The breakdown came after Woolworths reportedly told the ACCC it would bid for Officeworks and either Kmart or Target. It had asked for pre-purchase approval.
But now Woolworths will have to bid alone for the assets but this puts it at a disadvantage as Wesfarmers is now the only bidder prepared to bid for all of Coles Group.
WES already owns 12.8 per cent of Coles, which has strengthened its hand and makes Woolies' position weak.
The ACCC last week began market inquiries into Wesfarmers about concerns over concentration in the hardware and liquefied petroleum gas markets.
Woolworths shares yesterday closed up 3c at 27.65, Coles shares eased 3c to $16.90 and Wesfarmers were again well sought, rising $1.18 to end at $44.28.
