ALTHOUGH it heads into today’s auction as the only contender to buy Coles, Wesfarmers will “pay for certainty” to win the auction, with a generous offer pushing $17-a-share.

Although it heads into today’s 9am auction deadline as the only contender to buy all of Coles, Wesfarmers will be gunning for the immediate support of the Coles board.

To do so, the diversified company will need to surpass the $16.47-a-share price it paid when grabbing an 11.3 per cent in the retailer earlier this year.

Woolworths is expected to be the only other bidder, submitting a package offer for either KMart and Officeworks, or Target and Officeworks.

While claiming its grab for assets was more than attractive, a Woolworths spokesman said Wesfarmers remained in the box seat to secure Coles as a whole — what would be the biggest takeover in the country’s history.

“It is our intention to provide the Coles board with a compelling offer for its general merchandising assets and we believe we are the most committed purchaser of those assets,” Woolworths spokesman Ross Thornton said.

Another source close to the deal predicted Wesfarmers would secure the deal due to its deep pockets - and the Coles board’s perceived desire for a quick sale.

“My gut feeling is Woolworths will miss out. Its bid will be compelling but Wesfarmers will put a few extra dollars on the table and pay up for certainty to please the board,” the source said.

Coles reached an all-time high of $17.95 in May after a private equity consortium led by Kohlberg Kravis Roberts perused the retailers books.

After leader KKR pulled out, the consortium buckled - collapsing earlier this week when private equity firm TPG pulled the pin. The collapse sent Coles shares spiraling before easing slightly to yesterday’s close of $16.12.

Expert analysis yesterday varied considerably on the price Wesfarmers will offer today.

UBS analysts said the Perth-based company, which owns Bunnings, would need to pitch an offer in the range of $16.78 to $17.54.

“If Wesfarmers really wants Coles then it needs board support. Wesfarmers could conceivably offer $16.47 or less. However, we think a bid in the range stated is more likely,” the analysts said.

Another view was taken by JP Morgan analysts, who claimed Wesfarmers would not be restrained by the $16.47 price it previously paid for shares.

“We believe this purchase price is more a ceiling rather than a floor.”

Analysts said Coles would be unlikely to reject a bid below $16.47-a-share and pursue a break-up strategy - selling its general merchandising assets to Woolworths.

“We would suggest this would be a risky strategy. First, a break up would extend the timing of a final resolution for Coles shareholders to early next year,” one analyst said.

“Second, Coles shareholders could be left with residual businesses of no interest to predators.”