Tesco has pulled out of the £8 bn bidding battle for Australia’s second-biggest retailer, Coles. The Times

The British supermarket group has decided not to progress to due diligence on a bid for Coles after assessing the level of investment that the Australian grocer would require. Its withdrawal leaves open the field to private equity groups and Wesfarmers, the Australian conglomerate

Tesco was said to have been considering joining forces with Australia’s market leader, Woolworths, for a bid for Coles, and had hired Merrill Lynch to advise it.

Two bidders are now left to bid for Coles: Wesfarmers, working with Permira, Pacific Equity Group and Macquarie Bank, and a private equity consortium led by Kohlberg Kravis Roberts. A successful takeover would be Australia’s biggest private equity deal.