Woolworths mulls Asian raising

Retailer may look to cheap Asian debt to finance $3bn purchase of ParknShop.

Woolworths (WOW) will consider borrowing cheap Asian debt or an equity raising if it decides to push forward with its first offshore expansion since 2005 with the $3 billion acquisition of grocery chain ParknShop, The Australian Financial Review reports.

According to the newspaper, the supermarket giant may look to outbid rivals - Japan’s Aeon and Thailand’s Charoen Pokphand Group – by tapping Asian markets rather than domestic or US markets.

“If it were to be funded with low-cost Asian debt you’d most likely see an underwritten dividend reinvestment plan put in place – the economics could stack up better and Woolworths could also justify paying more for the acquisition,” BT Investment Management’s Sondal Bensan said.

The AFR reports Woolworths would not confirm or deny its interest in ParknShop, nor would it comment on reports it was preparing to submit a final bid next week.