Wesfarmers sells 5.2% of Coles Group

By Trevor Hoey. Published at Mar 31, 2020, in Market Wrap

Wesfarmers (ASX:WES) announced on Tuesday morning that trades had been executed for the sale of 5.2 per cent of the issued capital in Coles Group Limited (ASX:COL) for total pre-tax proceeds of $1,060 million.

Management had flagged the sale on Monday in response to a trigger built into the terms of Coles demerger from the Wesfarmers Group.

Specifically, Wesfarmers said, ‘’As a result of the Group’s interest falling below 10 per cent, the Relationship Deed agreed with Coles at the time of the demerger will terminate and Wesfarmers will no longer have the right to nominate a director to the Coles Board.

‘’As part of the transaction, Wesfarmers has also agreed to retain its remaining shares in Coles for at least 60 days from completion of the sale, subject to customary exceptions.’’

Wesfarmers managing director Rob Scott said that the significant and unprecedented events of the past few weeks have highlighted the importance of balance sheet flexibility to support the group in a range of economic circumstances.

He said he was pleased with the performance of Coles since the demerger and the very important role that Coles is providing, and will continue to provide, to Australian households during the COVID-19 crisis.

Wesfarmers reaps $130 million pre-tax profit

But at the end of the day, this was all about maximising shareholder returns for Wesfarmers as the divestment crystallises an attractive return for shareholders since the demerger and further enhances the group’s strong balance sheet position.

The sale will proceed at $15.39 per share in Coles with settlement expected on April to 2020.

This represents a significant discount to yesterday’s closing price of $16.82.

Wesfarmers expects to recognise a pre-tax profit on sale of approximately $130 million.

Following the sale, Wesfarmers retains a 4.9 per cent interest in Coles and has agreed to retain its remaining shares in Coles for 60 days from completion of the sale, subject to customary exceptions.

Where to invest $1,000 right now

When the experts at Next Investors have a stock pick, it may pay to listen.

The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.

They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.

Click the link below to see what they are currently investing in.


S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!