Hart's latest move reduces chance of Coles Myer bid

Rumours that Graeme Hart was preparing to tilt at Australian retail giant Coles Myer are looking unrealistic after he disclosed plans on Tuesday to take Burns Philp private.

Second guessing the deal-maker's next move is a market preoccupation on both sides of the Tasman and the trading halt on Burns Philp shares late on Monday fired speculation Hart was to announce his latest acquisition.

Coles Myer is the largest on a list of companies reportedly of interest to Burns Philp, which includes Amcor, Lion Nathan, Foster's, Telecom New Zealand and Coca-Cola Amatil.

Some media reports said Burns Philp could potentially raise up to A$16 billion in cash and debt to fund a deal such as a Coles Myer bid.

But BT Funds Management's Paul Richardson believes Rank Group's $1.6 billion offer for the Burns Philp shares it does not already own reduces the chances of a Coles Myer bid.

"If they were interested in doing that, it's surprising that they'd seek to delist Burns Philp, because at least having a listed entity like that would give them more funding flexibility."

Coles Myer was facing operational issues, as Goodman Fielder did when Burns Philp acquired it, providing scope for increasing profitability by reducing costs.

"Hart tends to like to get into pretty basic businesses that need some simple solutions," said Richardson.

However, with aggressively competitive rivals, Coles Myer "is not something you can hide away and fix like Goodman".

A bid for Coles Myer would probably pitch Burns Philp into a bidding war against two other contenders.

Coles Myer said it had received a conditional offer from a consortium of leveraged buyout funds, believed to be led by US private equity firm Kohlberg Kravis Roberts. The bid is believed to be more than A$16 billion.

A consortium said to be led by Pacific Equity Partners was also believed to be interested.