Wesfarmers to spin off Coles by November

Wesfarmers says its scheduled demerger of Coles will be completed in November, pending shareholder and regulatory approvals.

As part of the deal, Wesfarmers will retain 15 per cent of Coles and 50 per cent of Flybuys.

In its statement to the market, Wesfarmers said it would support the strategic alignment of the two companies in the areas of data, digital and loyalty.

Wesfarmers said Coles will operate with a dividend payout ratio of 80-90 per cent of net profit after tax. This is in line with the Wesfarmers dividend policy.

It said Coles would have a net debt of $2 billion with a credit rating Baa1/BBB+, giving it plenty of headroom.

When it announced the demerger March, Wesfarmers said it was spinning off the business to allow it to be more nimble pursuing growth opportunities.

“Post-demerger, Wesfarmers will have a portfolio of cash-generative businesses, with strong returns on capital, good momentum and leading positions in their respective markets,” Wesfarmers managing director Rob Scott said.

“Coles is well-positioned to be operated and owned separately, having established strong corporate infrastructure and management capabilities under Wesfarmers’ model of divisional autonomy.”



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