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Interested parties make first round bid for Masters

Masters new store

Three months after they pulled the plug on its foray into home improvement, Woolworths will finally have a better idea this week of the market value of the Masters and Home Timber and Hardware businesses.

Indicative offers for Masters and HTH were due on Monday afternoon after a four week process run by Citigroup Bank.

More than half a dozen parties are understood to have submitted bids and at least one potential bidder was still dotting the I's and crossing the T's on its offer, hoping to either make Monday's deadline or gain an extension.

In an attempt to maximise the overall value, Woolworths' adviser Citigroup is being flexible, allowing bidders to pick and choose assets, even offering to match bidders who are only interested in certain sites or lines of stock with other bidders to come up with an "integrated" solution.

But Street Talk can reveal several players, including private equity investors The Carlyle Group and Pacific Equity Partners, have pulled out of the process. Blackstone Group, the Pacific Alliance Group, Abacus Property Group, Charter Hall and Bunnings are still said to be interested in Masters stores and Anchorage Capital Partners and Metcash's Mitre 10 are keen on the profitable Home Timber and Hardware business.

It seems increasingly likely the indicative offers will be used by Woolworths to put a realistic value on the home improvement business after failing to agree on price with its joint venture partner, US retailer Lowe's.

Woolworths' chairman Gordon Cairns pulled the plug on the $3 billion hardware venture in January after Lowe's exercised a put option over its 33 per cent stake and after a strategic review found Masters would lose money for many years. 

Woolworths planned to buy out Lowe's to widen its exit options, but after months of negotiations and valuations by two independent experts the pair have failed to agree on what Lowe's stake is worth.

The duo are now likely to use the auction to reach a valuation.

Source: Insight DIY Team

03 May 2016

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