In a deal worth $306 million, Coles Myer has acquired 36 hotels, 103 bottle shops and 17 development sites from Hedley Liquor Group in an effort to promote its 1st Liquor brand throughout Queensland. The deal, which has taken nearly one and a half years to complete, involves a partnership arrangement between Coles and Hedley Liquor Group to develop the new sites.
Kerry Heilbronn, Freehills partner advising Coles Myer on the deal said that it was a “very strategic play” and that “it really gives Coles the opportunity to start to spin out its large box retail liquor sites right across Queensland, giving them a huge opportunity in the market”.
Heilbronn said the deal was “very complicated” due to the large number of properties involved and the fact that “a large portion of the consideration will be met by Coles issuing shares rather than paying in cash”.
Two other elements that necessitated careful analysis of the transaction were firstly that Hedley Liquor Group itself was and is acquiring other properties — thus according to Heilbronn, “all the assets were not even in the vehicles at the time we contracted”.
Secondly, as consideration is being paid in shares whose value shifts daily, Coles Myer “had to work out a pricing mechanism which was fair to both vendor and purchaser and that fairly pegged a price to reflect the value that the vendor thought he was getting”.
Freehills deployed a substantial amount of resources, large teams coordinating between its Brisbane, Sydney and Melbourne offices on what Heilbronn called a “terrific transaction involving virtually every aspect of corporate law”.
Coles Myer and Freehills are still awaiting ACCC clearance relating to the pricing mechanism, licensing and assets issues, but Heilbronn is confident that no problems will arise.
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