ROBB M STEWART
July 23, 2018
Dow Jones
Wesfarmers plans to retain a 15 per cent stake in supermarket chain Coles when it spins off the business later this year.
The conglomerate (WES) today said non-executive director James Graham, who retires from the board with immediate effect, will take on the role of Coles’ chairman when the business is demerged in a deal that is expected to be completed in November.
Wesfarmers said it would retain a minority interest in Coles to support a strategic alignment between the two companies, as well as a 50 per cent stake in loyalty program Flybuys.
Announcing the demerger in March, Wesfarmers said it planned to keep up to 20 per cent of Coles.
Today, Wesfarmers added that a spun-off Coles would have a strong balance sheet, with net debt of about $2 billion dollars and operating lease commitments of about $9.6 billion.
Under the proposed demerger, Wesfarmers’ shareholders will receive one Coles share for every Wesfarmers share held.
Coles is expected to have a dividend payout ratio ranging from 80 per cent to 90 per cent.
Wesfarmers also announced David Cheesewright, Jacqueline Chow and Richard Freudenstein will be non-executive directors of Coles.
The deal remains subject to shareholder and other approvals.
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