KKR eyes Woolworths takeover again

Speculation has emerged in the past week that private equity giant Kohlberg Kravis Roberts has resurfaced as a prospective bidder for Woolworths, with sources saying it is again scrutinising the business for a potential takeover bid.

Last week’s Macquarie Group investment conference in Sydney was abuzz with talk about whether the supermarket giant was once again a target for global buyout firms amid growing dissatisfaction with the stock.

But DataRoom has since learned that KKR has been running the numbers on the company as recently as the past few weeks.

It comes as Woolworths’ share price languishes. Investors have been discouraged by the company’s supermarket sales falling for four consecutive quarters.

Last week’s credit rating downgrade also sent the shares about 10 per cent lower.

Private equity groups were known to be weighing a potential takeover of the entire company last year, as first flagged by DataRoom.

KKR was known to have looked, while Blackstone and The Carlyle Group were also rumoured to have run the ruler over the company in November, despite denials from Blackstone that it was ever weighing such a move.

That was when shares were about $23.40. The shares have fallen since then to $21.62, which takes the market value to $27.6 billion.

In 2014, Woolworths shares traded as high as $38.49.

While local deal makers have expressed scepticism about the ability of private equity groups to find the money to buy the business, buyout firms have described a situation where large amounts of global capital are in search of opportunities as the lower Australian dollar makes targets here more attractive.

Apparently there have been efforts by bankers to stir up interest in Woolworths from private equity bidders, which believe the stock will fall even further, making the supermarket giant an even more attractive target in the months to come.

The latest speculation follows the move by Woolworths to replaced its outgoing boss Grant O’Brien with an internal candidate, Brad Banducci, dashing the hopes of some investors that a top-level executive from offshore would take the role.