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Decision day for Coles as Wesfarmers shareholders vote

Wesfarmers3Wesfarmers shareholders will meet later today to cast their vote on the proposed $20 billion demerger of Coles.

The parent company will hold a General Meeting to consider resolutions associated with the demerger at the Perth Convention Centre at 1.30pm today, or 30 minutes after the conclusion of Wesfarmers’ Annual General Meeting. A Scheme Meeting will follow to vote on a scheme of arrangement for the proposed demerger.

It is expected that Coles shares will be listed on the ASX on a deferred settlement basis from November 21, subject to regulatory, court and shareholder approvals.

The spin-off of Coles was first proposed in March this year and last month the Wesfarmers board recommended shareholders vote in favour of the demerger saying it will enhance prospects of “satisfactory returns” to shareholders by shifting focus towards “higher future earnings growth prospects”.

Wesfarmers managing director Rob Scott said in a company statement last month that the demerger would set up Wesfarmers for success over the next decade.

“The demerger will reposition the Group’s portfolio to target a higher capital weighting towards businesses with strong future earnings growth prospects,” Scott said.

“After the 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 said that it expects Coles to become a top-30 Australian listed company post-demerger with “leading positions in fresh food, groceries, liquor and convenience”.

The retail conglomerate will retain a 15 per cent stake in Coles if the demerger is approved as well as a 50 per cent interest in the flybuys joint venture with Coles.

In August, Wesfarmers finalised the Coles board appointments. Steven Cain, who took up the role in September, would remain as managing director and chief executive officer post-demerger and James Graham would remain Coles’ chairman.

The demerger must be approved by more than 50 per cent of Wesfarmers shareholders and at least 75 per cent of the total number of votes cast on the resolution.

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