Coles’s share price jumped 40c to $14.40 yesterday on the back of rumours that another barbarian may be banging at the retail giant’s gate. But could they already be inside?
Sources close to the retailer have revealed to Crikey this morning that directors of US retail giant Wal-Mart are in Melbourne, along with a team of advisers from McKinsey, and they’re in the advanced stages of making a rival bid for the retailer that would see the company carved up.
The proposal would see Wal-Mart buy the Coles grocery business (along with Kmart, Vintage Cellars and Liquorland), long-time board critic Solomon Lew would buy Target, and the profitable Officeworks chain would be sold to the highest bidder.
There’s been market speculation that Gerry Harvey’s Harvey Norman would be interested in buying the Officeworks stores if there’s a breakup of the Coles assets.
The emergence of a rival bidder to private equity elephant Kohlberg Kravis Roberts will be a boon to investors who have been looking for some genuine competition to push the share price beyond the $14.50 per share KKR offer rejected last month by the Coles board.
Whatever happens, barbarian interest in the retailer has taken the price a long way beyond the $10.60 the market thought it was worth under CEO John Fletcher’s underwhelming five-year plan.