Will Coles be Too Much for KKR?

KKR have taken out a short term, AUD $16 billion dollar, loan to fund its takeover of Alliance Boots in the UK. Senior management at Alliance Boots stand to gain significant bonuses if the takeover proceeds – up to $15 million for the CEO Richard Baker. Apparently it is a short term finance deal at very high interest rates. It makes us ponder a couple of points:

1. Can KKR still proceed with a timely offer on Coles? Will the UK deal limit the capacity of KKR in the immediate short term?


2. What incentives will KKR offer Coles Management? How does this compare to the Wesfarmers’ offer?

I wonder if we will see the Coles Board attempt to delay proceedings to ensure KKR can make a decent offer?

Jason Wenn