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UPDATE 1-Australia's Coles to review ownership, shares surge


SYDNEY, Feb 23 (Reuters) - Australian retailer Coles Group Ltd. said on Friday it is reviewing ownership options following a number of informal approaches in recent weeks, sending its shares up over 7 percent.

The board would consider whether a full sale or a restructuring of the group, including a demerger, would create greater value than the current structure and growth strategy, the company said.

Coles last year rejected an A$18.2 billion ($14.3 billion) bid for the company by a private equity consortium led by Kohlberg Kravis Roberts [KKR.UL], the second offer made by KKR.

A source close to KKR said on Friday it was not behind the recent approaches.

Coles also cut it earnings forecast for 2008 by 10 percent on Friday, blaming lower than expected sales at its supermarkets and discount chain Kmart, and said its turnaround strategy would produce slower growth in future years than previously envisaged.

Coles said the company has received a number of informal approaches.

Coles chairman Rick Allert said in a statement independent advice put the value of the company at substantially above A$15.25 a share, which was the level of the second KKR offer.

Allert said a formal process would be established to receive and assess proposals from potential bidders.