Wesfarmers’ $130m kick

Shares sell-off aims to shore up balance sheet

WESFARMERS expects a $130 million pre-tax profit after selling down another lot of shares in supermarket giant Coles amid coronavirus uncertainty.

Wesfarmers, which owns Bunnings, Kmart, Officeworks and more, told the market yesterday it has sold a 5.2 per cent stake – worth $1.06 billion – in Coles Group.

It’s the second time in two months that Wesfarmers has sold down its stake in Coles.

It offloaded a 4.9 per cent parcel worth $1.1 billion in February. The latest shares will be sold at $15.39 each – an 8.5 per cent discount to yesterday’s traded price of $16.82 – and settlement is expected on April 2.

Wesfarmers said the coronavirus pandemic and its economic fallout prompted the group to sell the shares and shore up its balance sheet. The conglomerate retained 15 per cent stake when it a spun Coles off as a separate entity as part of a $20 billion demerger in November 2018.

Moody’s Investors Service vice-president Ian Chitterer said the conglomerate was exposed to the risk of a government-enforced shutdown of its retail stores. In New Zealand, Bunnings is only open to trade customers.

While many retailers in Australia have closed temporarily, Bunnings, Kmart and Officeworks continue trading.

Wesfarmers will retain a 4.9 per cent interest in Coles, which it is required to hold for at least 60 days from completion of the sale.

It will lose the right to nominate a director to the Coles board as a result of its interest falling below 10 per cent.

Shares in Wesfarmers finished yesterday down $1.62, or 4.51 per cent, at $34.27, while Coles shares closed at $15.16, down $1.66, or 9.87 per cent.