Wal-Mart eyes Australia
WAL-MART, the world's biggest retailer, which last week gave up on Germany, is reportedly looking at trying its luck in Australia and is sizing up our two biggest supermarket operators, Coles Myer and Woolworths.
The UK's Sunday Telegraph reported Wal-Mart - valued at $US185 billion ($242 billion) - "is believed to be close to making its first acquisition in Australia".
It said that executives from Wal-Mart, which is based in Bentonville, Arkansas, recently visited Australia to look at possible targets.
Coles Myer, with a market value of nearly $14 billion, and Woolworths, valued at more than $22 billion, were reported to "have been identified as likely candidates".
The timing of the speculation could not be worse for Coles Myer chief John Fletcher. Today he announces details of his new strategy, designed to help the company catch up with Woolworths, whose sales and market share are growing faster.
Talk of Wal-Mart's interest will also steal the thunder of an expected name change - possibly to Coles Ltd or Coles Group - following the sale of the Myer department store business and the expected rebranding of the group's discount supermarket operations, Bi-Lo, as Coles.
"Wal-Mart has been looking at Australia closely," an executive close to Wal-Mart told the UK's Sunday Telegraph. "After the German situation it will be looking to do a deal very quickly."
Coles Myer spokesman Scott Whiffin said the company did not comment on market rumours.
Coles has offloaded its underperforming Myer department store chain for $1.4 billion to a private equity firm in favour of focusing on its supermarket and alcohol businesses.
The market has since re-rated the group as its remaining core businesses are more attractively valued and offer scope for corporate activity.
While Coles Myer sources have played down recent reports that the company was seeking to adopt a strategy like Wal-Mart's, they were not forthcoming last night about any talks regarding a closer relationship with the US retailer.
Woolworths spokeswoman Clare Buchanan did not return the Herald's calls.
A A Wal-Mart spokeswoman declined to comment to the Sunday Telegraph. Executives close to Wal-Mart suggested any deal was some time off, the paper said.
Australian investors last night did not rule out the possibility of Wal-Mart taking an interest in Australia but noted the higher growth potential in Asian countries, including China. It was noted that Woolworths already emulates Wal-Mart's business model.
Despite quitting Germany, any move into Australia would see Wal-Mart up against the aggressively expanding German discount supermarket chain, Aldi.
Last week Wal-Mart, led by Lee Scott, announced the sale of its 85 German outlets to rival operator Metro. The company had difficulty appealing to German tastes.
Wal-Mart is expected to make a $US1 billion pre-tax loss in the second quarter of its financial year.
