Wesfarmers has released an update on the upcoming demerger from Coles; confirming an expected completion date of November 2018 subject to shareholder and other approvals.
The parent company plans to retain a 15 per cent minority ownership interest in the supermarket, in order to retain strategic alignment between the companies to facilitate growth initiatives regarding data, digital and loyalty.
To assist in these growth initiatives, Wesfarmers will also retain its 50 per cent ownership of flybuys, recently voted Australia’s favourite loyalty program, to better leverage the combined digital and data ecosystem, improve customer offers and continue development of the loyalty program.
Wesfarmers managing director Rob Scott said the demerger would reposition the group’s portfolio, setting up both Wesfarmers and Coles for success.
“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,” said Scott.
“Maintaining a strategic stake in Coles provides an important connection with Wesfarmers to reinforce opportunities to collaborate in the data, digital and loyalty areas. Flybuys will be better able to realise its potential as a leading data and loyalty company through the ongoing support and investment of both Coles and Wesfarmers and by leveraging the broader networks of the Wesfarmers Group, including the existing partnerships with Kmart and Target.”
Proposed Board Appointments
As part of this announcement, the group also appointed several people to the proposed demerged Coles board in order to position the business for success as a separate listed company.
Wesfarmers non-executive director James Graham has retired from the position with immediate effect, coincident with his appointment as chairman-elect of the proposed demerged Coles group.
“[Graham]’s experience and integrity, coupled with his affinity for the Coles businesses, and respect and understanding for the brand and its history, positions him ideally to help guide its future strategic direction and ongoing focus on the creation of value for Coles shareholders,” said Wesfarmers chairman Michael Chaney.
Other non-executive directors proposed are David Cheesewright, Jacqueline Chow and Richard Freudenstein; bringing experience in international retailing, technology and communications, data and analytics, and supply chain management and relationships in the fast moving consumer goods sector.
Cheesewright will be the Wesfarmers nominee on the Coles board in relation to its shareholding interest, and will also be appointed an advisor to the Wesfarmers board, and brings more than 25 years of experience in international retailing and manufacturing due to his time as President and CEO of Walmart International.