Australian rumors: Coles Myer on the block?

Lots of speculation swirling Down Under. Coles Myer, the country's #2 retail chain, which recently spun off its Myers department stores to concentrate on supermarkets and discount stores, is reportedly being eyed for acquisition. Rumored buyers include Wal-Mart, Tesco, and a consortium of private equity firms.

The Times (UK) has an interesting take on the private equity possibility:

If Coles is bought by a private equity consortium it will be the second big supermarket group taken private this year. CVS and Cerberus Capital bought the US-based Albertsons chain for US$17.4 billion (£9.2 billion) in January.

The dominance of private equity bidders for both Coles and Albertsons demonstrates the difficulty that supermarket groups now face in growing by acquisition.

These retailers have become so big, and their supply chains so complex, that trade mergers and takeovers are becoming unattractive — as Wal-Mart’s recent difficulties in Germany and South Korea, as well as Morrison’s complicated merger with Safeway, demonstrate.

This is likely to mean that supermarket retailers will have to concentrate on organic growth in the future.