Favourite set to go Myer shopping Richard Gluyas March 08, 2006 PRIVATE equity outfit Newbridge Capital has emerged as the hot favourite to win the auction for the Myer department store business.
A Coles Myer spokesman said yesterday that bids for the Myer business - as well as the flagship property in Bourke Street, Melbourne, in a separate process - were still under consideration.
However, there is strong speculation that the Newbridge/Texas Pacific consortium, also featuring the Myer family, is at least the front-runner, if not Coles' preferred bidder.
The deadline for final binding offers for Myer expired last Friday.
The business and the property are expected to fetch a total of about $1 billion.
One source said the quick emergence of Newbridge as favourite suggested there was a material gap between the leading bid and the next most attractive offer.
Other parties to lodge binding offers last Friday were CVC Asia Pacific and South African retailer Edgars Consolidated.
Electrical and furniture retailer Harvey Norman is at long odds and not thought to be a serious contender.
Apart from price, the Newbridge consortium would hold a number of attractions for Coles.
Three years ago, Newbridge's parent, Texas Pacific, combined with CVC to acquire British department store retailer Debenhams.
The consortium could argue it is experienced in higher-margin, upmarket retailing, and therefore would not threaten Coles' discount franchises Target and Kmart by taking Myer downmarket.
Myer's senior management, including managing director Dawn Robertson, have also discussed taking a small equity position in the consortium.
This would help minimise any termination payments that could be triggered by selling Myer to a trade buyer like Edgars, with its own management team.
The Myer family is thought to be prepared to contribute a maximum of $100 million in equity or debt instruments for a successful bid.
Its direct equity stake is likely to be 10 per cent or less.
Edgars, according to a source, lodged the cleanest bid for Myer, but came up short in terms of price.
There was also a fear that it would introduce Myer to a more mainstream group of customers, surrendering margin but increasing sales at the expense of Target and Kmart.
The parallel sale of the Myer property in central Melbourne is believed to be down to a shortlist of two: Lend Lease's Australian Prime Property Fund; and the listed property trust CFS Gandel.
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