Coles now owned by Wesfarmers

After a very long auction, the Coles Group board has unanimously recommended the takeover offer from Wesfarmers, which has agreed to A$4 (€2.5) in cash and A$0.28 (€0.17) of its own stock for each Coles share. The resulting A$21.9 billion (€13.7 bn) price tag dwarfs all previous offers.

The deal will end a lengthy process, which began when Coles put itself up for sale after struggling with falling sales. Wesfarmers, was the last bidder standing after a series of private equity firms dropped out of the running. Last year, Coles rejected two offers from private equity firm Kohlberg Kravis Roberts (KKR), which had offered A$15.25 (€19.57) a share offer for the retailer, valuing Coles at A$18.2 billion (€11.4 bn).

Woolworths, which could not bid for Coles's supermarkets because of competition issues, was believed to have bid A$6 billion for Coles's office supplies retail chain, Officeworks, and its discount chain, Target; but the board was not interested in offers to break up its key assets. A private equity consortium led by Texas Pacific Group pulled out of the sale process last week, ending any hope of the competitive auction envisioned by the Coles board.

The financial problems with Coles, began when chief executive John Fletcher's re-branding strategy for the BI-LO supermarkets backfired. Coles chairman Rick Allert defended Fletcher's performance, but Wesfarmers managing director, Richard Goyder, has made it clear he thinks there is a lot of improving to be done. The Wesfarmers boss has refused to comment directly on whether he will replace the Coles senior management team.