Australia's new #1 retailer
Australian conglomerate Wesfarmers announced it would acquire Australian retail chain Coles Group. The deal, for US$18.6 billion) is the largest in Australian history. It comes after along bidding war with several private equity consortiums finally dropping out of the contest.
Coles Group, with origins back to 1916, owns more than 650 supermarkets in Australia under the Coles and Bi-Lo names. It also is a leader in liquor sales (1st Choice Liquors, Liquorland, and Vintage Sellers) and convenience stores (Coles Express). It owns Australia's #1 office supply retailer Officeworks, with over 100 stores, and computer reseller Harris Technology, with around 10 stores and a large online presence.
Coles also has the rights to Kmart (over 180 stores) and Target (over 150 stores) department stores in Australia and New Zealand.
Coles Group until recently was called Coles Myer. It sold off its Myer department store division to a private equity consortium in 2006. The deal could be a big plus for Coles, whose growth in recent years has stalled as rival Woolworths has accelerated. Together the two companies have over 50% of the Australian retail market.
Wesfarmers, founded in 1924, started life as a farmers' cooperative. Selling farming supplies in Western Australia. It now has a wide portfolio ranging from coal miens and insurance to railroads and fertilizer. It owns Bunnings, Australia's #1 home-improvement retail chain with over 200 locations.
Various newspapers report that the Coles acquisition will turn Wesfarmers into a company that generates 70% of its income from retail
Woolworths, which owns over 750 supermarkets in Australia and New Zealand, also owns liquor stores, general merchandise stores, and consumer electronics stores, so it competes with Coles in many areas. It has already asked the Australian Competition and Consumer Commission that some of Coles's assets, namely Officeworks and either KMart or Target, be sold off (presumably to Woolworths itself).
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