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Coles board battle takes new turn
By Geoff Hiscock
SYDNEY, Australia (CNN) -- The boardroom stoush at Australia's biggest retailer Coles Myer took a fresh turn Tuesday with an announcement that chairman-elect Rick Allert will resign as chairman of another big company, the Southcorp wine group. Supporters of key Coles Myer shareholder and long-time director Solomon Lew have argued that Allert should quit Southcorp if board renewal is the real goal of other directors who want Lew out. Allert is expected to be named chairman at a Coles Myer board meeting on Thursday, replacing Stan Wallis. Wallis and seven others on the 10-member board are opposed to Lew's re-election as a director at the annual meeting on November 20, citing the need for board renewal and concerns over related-party transactions. Lew, whose corporate vehicle Premier Investments spent about Aust. $80 million ($44 million) last week to lift its stake in Coles Myer to 5.87 percent, has been a Coles Myer director since 1985. Related-party transactionsHe has a range of retail interests and supplier transactions involving Coles Myer, but said on Sunday that almost every director on the retailer's board also had related-party transactions. The other key issue in the bitter battle between Wallis and Lew is about the performance and structure of the retailer. Coles Myer, which turned over A$25.7 billion ($14 billion) last financial year from its Coles supermarkets and stores such as Myer Grace Bros, Target and Kmart, has been looking to spin off under-performing units, including Myer Grace Bros. But early last week it delayed a decision on splitting up the company until at least July 2003, citing the importance of the coming Christmas trading period. (Full story) Lew has argued against an early spinoff of Myer Grace Bros and Target. Stock in Coles Myer tumbled to a five-year low of A$5.70 early last month amid perceived poor performance by some of its units and the battle between Wallis and Lew. But they surged to a nine-week high of A$6.43 last week after the retailer lifted full year net profit 6 percent to A$354 million ($192 million). (Full story) They are trading Tuesday afternoon at A$6.45 on a day when the broader market, measured by the S&P/ASX200, is up about 0.1 percent to 2943.0. In a statement to the Australian Stock Exchange Tuesday, Southcorp Ltd, the big wine group that includes Penfolds, Lindemans and Rosemount among its labels, said Allert had told the company he would seek the Coles Myer chairmanship on Thursday. Allert, it said, intended then to resign as Southcorp's chairman and director on October 31.
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