Coles Myer, Australia's biggest retailer, has announced a multi-billion dollar restructuring of its entire operations, in one of the largest series of transactions in the country's corporate history.
But it failed to satisfy major investors who are pushing for a boardroom shake-up, because the restructuring failed to address shareholders' concerns about conflicts of interest among directors.
The company said the reorganisation could see the creation of several new public companies, further asset sales, and share buybacks that might take up to a year to complete.
Coles said that its plans would "fundamentally change the face of the Australian retail market". The company added that Solomon Lew, Coles' biggest shareholder, will relinquish his role as executive chairman and become non-executive chairman.
The retailer has been under pressure from institutional investors to appoint an independent chairman and make board changes after details of a secret share transaction were revealed last month.
The share transaction, which was revealed only after the sacked finance director, Philip Bowman, went public with his concerns, cost Coles A$18m (pounds 9.3m) and benefited a company associated with Mr Lew.
A statement by Coles said that details of the restructuring would take some time to be finalised.
"The restructuring will realise far-reaching benefits for all stakeholders and shareholders, employees, suppliers and customers," the statement said. "The board's preferred structure is to separate the major businesses within the group and create several new public companies, with separate management and independent boards."
Coles said that without cross-ownership, a common parent or common holding company, these public companies would be able to function independently. But large institutional investors were not satisfied with the restructuring and said they would seek replacements for some of Coles current directors, at the annual general meeting on 21 November. The Australia Mutual Provident Society (AMP), Australia's biggest institutional investor, said AMP Investments, the State Superannuation Corp and Bankers Trust Australia would seek the changes.
"I don't think it really solves anything," said George Batsakis, analyst with J.B. Were. He felt that Coles' underlying profits would be the same, irrespective of the new-look structure. Another broker said: "Breaking it up and buybacks are just a diversion."
A retail analyst said that while a proxy battle between the company and major shareholders was still likely, it was too early to say if this would occur at the annual meeting or later.