Coles Myer rejects A$18 billion offer

MELBOURNE - Australia's second-largest retailer, Coles Myer, rejected a revised A$18.2 billion ($20.9 billion) takeover proposal from a private equity consortium, sending its shares down 6 per cent.

Coles said the Kohlberg Kravis Roberts-led consortium had advised the board that its A$15.25 per share bid, raised 5 per cent from its previous offer, was final and that it would withdraw if it did not have board support by 9am on Monday.

"I would say in all likelihood it signals the end of this current round of proposals. If someone else emerges down the track only time will tell," Commonwealth Securities analyst Grant Saligari said.

Coles Myer shares fell as much as 6.9 per cent to A$13.50, a six-week low, before recovering some ground to be down 5.9 per cent at A$13.65 in early trade. "The revised proposal at A$15.25 a share still substantially undervalues the company and its prospects," Coles Myer chairman Rick Allert said.

The KKR bid values Coles at 23 times forecast earnings, in line with an Asia-Pacific average of 25 for hypermarkets but at a premium to the 17 PE for the world's largest retailer, Wal-Mart Stores.

Coles last month rejected a A$14.50 a share indicative bid, valuing the company at A$17.3 billion, which would have been the largest takeover in Australia's corporate history if it went ahead.

Coles said the participants in the consortium had reduced to five members comprising KKR, Carlyle Group, CVC Asia-Pacific, Texas Pacific Group and the Blackstone Group.

Coles had previously said the original syndicate had also included Macquarie Bank, Bain Capital and PEP.

- REUTERS