Australian conglomerate Wesfarmers Ltd's takeover of retailer Coles Group Ltd would create a company with A$44 billion ($39 billion) in annual revenues and the country's largest private employer, documents showed on Monday.
In a booklet sent to Coles shareholders ahead of a vote on the A$19.5 billion deal on Nov. 7, Wesfarmers said the merged company would have proforma earnings before interest and tax of A$2.5 billion and 200,000 employees.
Shareholders ... will benefit from the value to be created by combining Coles Group's significant retail brand platform and store network with Wesfarmers' decentralised business model, financial discipline and execution capabilities, Wesfarmers said.
The takeover would be Australia's largest corporate deal and would end more than a year of uncertainty for the country's second-largest supermarket chain.
Coles put itself up for sale in February after poor performance in its core supermarkets business. It had previously rejected two takeover offers by private equity firm Kohlberg Kravis Roberts last year.
Food, liquor and convenience stores make up 58 percent of the Coles Group at present, and the share will shrink to 28 percent of the combined company, Wesfarmers said in the booklet.
The Perth-based conglomerate owns Australia's largest hardware and home improvement chain, Bunnings, and has interests in coal mining, insurance, chemicals and fertiliser manufacture.
It said it plans to pay fully franked dividends in excess of A$2 per Wesfarmers share for the 2008 and 2009 financial years, even if there is no improvement in the Coles units over that time. Wesfarmers reiterated it plans to run a decentralised business model for each of the Coles units, and plans to bring in specialist local and international retailing managers to help turn around the supermarkets business.
The shareholder vote is the last remaining hurdle to the takeover, which has already received regulatory approval.
In separate financial statements, Coles said it has already spent A$56 million on consultants' and advisors' fees over the sale, not counting an undisclosed success fee if the deal goes through.
Coles shares were up 1.3 percent in early afternoon trade to A$15.60, while Wesfarmers rose 0.3 percent to A$42.11, in a broader market up 0.4 percent.