Trading in the shares of Australian retailer Coles Group Ltd. and conglomerate Wesfarmers Ltd. was halted on Monday for talks on a bid by Wesfarmers for Coles that could be worth up to A$20.7 billion ($17.7 billion).
The two companies did not give details in separate statements to the Australian Stock Exchange.
The Australian Financial Review said on Monday that Wesfarmers was close to winning Coles with a sweetened offer in what would be the largest takeover in Australian corporate history.
The business daily said Wesfarmers was believed to have offered between A$17 and A$17.25 a share for Coles, raising the scrip component of its offer after one of its bidding partners, private equity firm Permira, pulled out.
At the top end of the reported range, the bid would be worth about A$20.7 billion.
The paper, which did not cite sources, also said that because of the sweeter bid, Coles was unlikely to consider a second bid for parts of its operations from rival supermarket chain Woolworths Ltd.
Coles had set a Saturday deadline for bids, four months after putting itself up for sale in February because of poor performance in its core food and liquor business.
Wesfarmers was the only bidder for the entire Coles group after a rival private equity bidding group led by TPG pulled out of the running last Thursday, citing the rising cost of credit in the United States.
The spike in borrowing costs also made a deal unpalatable to Wesfarmers' partner Permira, according to media reports, prompting it to withdraw over the weekend.
A steady deterioration in Coles' core supermarkets and liquor business over the past few months reduced the price bidders were willing to pay for the group, which is Australia's second-largest supermarket chain after Woolworths.
Wesfarmers snapped up a 12.8 percent voting stake in Coles in April at A$16.47 a share. After rising to a record A$17.89 in May, Coles shares dived as members of the private equity consortium pulled out, and on Friday closed at A$16.12.
Both companies asked for their shares to remain suspended until the start of trade on Wednesday, unless an announcement was made sooner.
Wesfarmers shares closed on Friday at A$45.73, a record high, having risen 21.4 percent since late May as its prospects for winning Coles kept improving.