COL - Coles Group

[noirua]

Information in the London Evening Standard suggests that Tesco may no longer be interested in Coles Group.

Trading around $17.80, the number of interested parties should maintain interest for sometime.

 

[Gordon]

i notice that coles have dropped to $16.7 over the last few days. Anyone think it could be a good time to enter back in - i havnt seen any news recently.

 

[reece55]

Isn't this just a complete waste of shareholder funds.....

Coles is so desperate to get a bid over the line that it is offering to pay $10 Mil towards a consortium's due diligence....

Honestly, the morale of the management team in this group must be so down at the moment, what would be your incentive to improve the situation in the knowledge that your job is probably/maybe gone in the foreseeable future....

No wonder the business is under performing...........

http://www.theage.com.au/news/busin...ers-for-bidders/2007/06/08/1181089328861.html

Cheers

 

[reece55]

And the price is in....

WES will pay $4.00 and 0.2843 WES shares for each CGJ share.

That would value Coles at 17.00, or 17.25 if you include the final dividend.

After such a drawn out process, it's lucky I think that the CGJ board got away so easily. Really, their underperformance created performance - what an upside down world we live in where Fletcher completely destroys an iconic Australian company and yet he will walk away with plenty in his back pocket.......

Cheers

 

[Broadside]

exactly! the poor management and underperformance was what made it attractive, now Fletcher will probably walk away with millions along with the board. Too bad shareholders didn't get offered a deal last year, then they could have walked away and reinvested in the market, up 28% last FY.

 

[Prem]

How will the takeover bid from wesfarmers affect coles's share price?

(I am only new so be nice)



Thanks in advance

 

[PZ99]

@Joe Blow : CGI is now COL - COLES GROUP LIMITED

SYDNEY--Australia's newest-listed company, grocery chain Coles Group Ltd. (COL.AU), began trading in the middle of its expected range on Wednesday in the largest Australian corporate spin off on record.

The former unit of conglomerate Wesfarmers Ltd. (WES.AU) is valued at 16.9 billion Australian dollars (US$12.2 billion) based on Coles's recent share price of A$12.70, after shares began trading on the Australian Securities Exchange. Shares opened at A$12.49 on a deferred settlement basis and dipped as low as A$12.30 before rising.

The listing is bigger than South32 Ltd. (S32.AU), which was spun out of BHP Group (BHP.AU) in 2015. South32 was valued at about US$9.4 billion and previously was the largest spin off in Australia, according to market-data firm Dealogic.

For Wesfarmers, which bought Coles in 2007 for more than A$19 billion, listing the grocery chain is in line with its recent strategy of shedding slower-growth businesses to free up capital for buybacks, dividends or other acquisitions. The strategy isn't a sure bet, however, given that growth has slowed at hardware chain and star performer Bunnings. The company also misfired on its purchase of the Homebase hardware chain in the U.K.

Wesfarmers shareholders voted last week to approve the spin off. The conglomerate planned to retain a 15% stake in Coles and says it has pumped some A$9 billion of investment into the grocery chain during its ownership.

Nonetheless, some investors said Coles will need to spend cash on store refurbishment and new distribution centers in the coming years to compete effectively with Woolworths. Daniel Mueller, a portfolio manager at Vertium Asset Management, which isn't a Wesfarmers shareholder, said the balance sheet at Coles "may not be as strong in five years" at it appears today.

"If you're an investor more interested in potential capital management and less gearing, less financial risk, Woolworths stands out to Coles," Mr. Mueller said. But he didn't rule out investing in Coles if the share price dropped low enough.

 

[notting]

They bought it for 22B (purchased 13% before the 19B takeover) spent 9B, making the total cost of the asset 31B which they are now selling for 16.5B Wonder what the total profit after tax was for Coles during the time they owned it? 1B?

 

[Ferret]

They bought it for 22B (purchased 13% before the 19B takeover) spent 9B, making the total cost of the asset 31B which they are now selling for 16.5B Wonder what the total profit after tax was for Coles during the time they owned it? 1B?

Interesting figures. They also got Officeworks, Kmart and Target when they bought Coles. I wonder what their value is?

 

[sptrawler]

I tend to wonder, if it wouldn't be better to offload COL and top up WES?
Coles are in a very competitive space, that is getting somewhat crowded.
Whereas Wes is cashed up at a good time, as long as they spend wisely.

 

[notting]

Interesting figures. They also got Officeworks, Kmart and Target when they bought Coles. I wonder what their value is?

Their assumed as part of the Coles package.

 

[luutzu]

I tend to wonder, if it wouldn't be better to offload COL and top up WES?
Coles are in a very competitive space, that is getting somewhat crowded.
Whereas Wes is cashed up at a good time, as long as they spend wisely.

I haven't looked but I think you might be right. Best to not buy stuff capable, alright, sometime capable, people like those at WES offload.

 

[Garpal Gumnut]

Some interest for the few hours it traded. Could go up. Could go down.

 

[sptrawler]

I haven't looked but I think you might be right. Best to not buy stuff capable, alright, sometime capable, people like those at WES offload.

I'm not saying Coles aren't any good, just that it is a very competitive space they trade in, also I have exposure to WOW.
I already explained why I personally prefer WOW, and I would keep COL if I thought there was plenty of room in the market.
But I think WES have time/timing and money on their side.
Just my opinion and mostly baseless.

I do hold WES, COL and WOW.

 

[luutzu]

I'm not saying Coles aren't any good, just that it is a very competitive space they trade in, also I have exposure to WOW.
I already explained why I personally prefer WOW, and I would keep COL if I thought there was plenty of room in the market.
But I think WES have time/timing and money on their side.
Just my opinion and mostly baseless.

I do hold WES, COL and WOW.

Hard to go wrong owning the nation's duopoly.

 

[sptrawler]

Hard to go wrong owning the nation's duopoly.

It is all a mater of size, the amount I have, doesn't matter.

 

[Smurf1976]

Hard to go wrong owning the nation's duopoly.

I do wonder if that is finally cracking though?

Aldi seem to be expanding quickly enough to have created enemies. In other words, people getting worried about them.

Then there's what seems to be a broader societal trend away from "big corporate" stuff toward more boutique offerings which by their very nature neither Woolworths or Coles do.

Then things like Kaufland wanting to enter the market.

Individually they're not massive changes but collectively they're significant I would think.

 

[sptrawler]

I agree with you smurph, I think there will only be space for one big supermarket chain, heads or tails?

 

[bigdog]

I have not bought Coles fuel for several years because they were always dearer and the first to increase the price of fuel.

Well today they announced

"Coles said that earnings from its Express division would fall almost 70 per cent this year"

"fuel sale volumes in the first half of this financial year were down to 62 million litres a week, compared with 74 million a week last year."

https://www.smh.com.au/business/com...-cuts-as-earnings-plunge-20190206-p50w07.html

Coles Express signals petrol price cuts as earnings plunge
By Patrick Hatch and Cole Latimer
6 February 2019 — 2:22pm

Petrol prices are set to fall at Coles Express services stations under a new deal with its fuel supplier which it hopes will enable it to compete more sharply with rivals BP and Caltex.

The supermarket giant's fuel sales have been falling because its pump prices were too high under its agreement with Viva Energy, and the Australian Competition and Consumer Commission has signalled it out as the most expensive fuel retailer in the country.

On Wednesday, Coles said that earnings from its Express division would fall almost 70 per cent this year and revealed it had signed a new agreement with Viva locking in the partnership to 2029.

Under the new deal, Viva will operate and set prices at the bowser. Coles will take a commission on each litre of petrol Viva sells, and run the convenience store operations at each service station.

Viva will also pay Coles $137 million under the deal.

Underscoring the need for change in the business, Coles released a trading update on Wednesday showing that average fuel sale volumes in the first half of this financial year were down to 62 million litres a week, compared with 74 million a week last year.

It forecast earnings from the Coles Express business would fall from $164 million last year to $50 million this year, which equates to a drop in earnings of about 7 per cent within the Coles business as a whole.

Coles Express chief executive Alister Jordan said that having each side of the partnership focusing on their speciality would make them more competitive.

“It allows us to rebuild the Coles Express business with Viva, where both sides are highly aligned and incentivised to grow the overall alliance,” Mr Jordan said.

Viva Energy chief executive Scott Wyatt said by shifting the control of the pump from Coles back to Viva the fuel price would likely drop.

“Historically, Coles set the retail pump price but we felt in order to grow our business we had to have control over how the pump price is set,” Mr Wyatt said.

“Part of this deal is focusing on improving our fuel offer and improving the competitiveness of pricing.”

He said the company was aiming at a modest increase in fuel sales, rising from the average of 64.2 million litres a week sold last year to between 70 and 75 million litres a week.

“This is a very significant milestone for the company,” Mr Wyatt said.

“We’ve taken the opportunity to reset the relationship and recognise things have changed.”

Loyalty scheme benefits such as earning Flybuys points on fuel sales and the 4¢ a litre shopper docket discount would continue, Coles said.

Viva’s shares were up 13 per cent to $2.17 by 1.30pm, while Coles, which was spun-off from Wesfarmers in November, was down 2.2 per cent to $12.45.

 

[sptrawler]

Coles is going to automate, its home delivery selection process, it could be a game changer. IMO
I always said to Mrs Trawler, it seems inefficient to pay night fillers to stack the shelves, and then pay home delivery pickers to empty them.
I still think COL could be a takeover target, in the longer term, ready made for a big U.S or European mega chain. Just my opinion.
By the way, I do have a small holding, from the demerger.

http://www.thebull.com.au/articles/a/80976-coles'-$150m-deal-to-double-deliveries.html