Wesfarmers Limited has released a scheme booklet detailing its proposed demerger of the Coles business.
The booklet was announced in early October, with the demerger expected to be completed in November 2018.
It is anticipated the proposed demerger will create a new top 30 company listed on the ASX, with leading positions in supermarkets, liquor and convenience.
If the demerger proceeds, and Coles is admitted to the official list of the ASX, new proposed Coles board and committee charters and key policies will apply from the date of listing on the ASX.
These charters and policies are summarised in the scheme booklet, which sets out the effects of the demerger, certain information required by law and all other information known to the Wesfarmers directors, which is material to the decision of Wesfarmers shareholders to vote in favour of, or against, the demerger resolutions.
Coles will consist of three key divisions – supermarkets, liquor and convenience.
Coles’ net debt following demerger will be about $2 billion, and its balance sheet is expected to support strong investment grade credit ratings.
Wesfarmers board chairman Michael Chaney said Coles’ turnaround over the past decade, and its strategy to ensure it remains a trusted brand for Australians, sees it well positioned to continue to grow as a mature defensive business with strong investment characteristics.
“We are committed to ensuring Coles is set up with a strong foundation for success and growth as an independent listed company,” he said.
Wesfarmers plans to retain a minority ownership interest of 15 per cent in Coles and a 50 per cent interest in the flybuys joint venture with Coles.
“This will support strategic alignment between Wesfarmers and Coles in relation to mutually beneficial growth initiatives, including in the areas of data, digital and loyalty, and support the continued development of flybuys by leveraging the combined Coles and Wesfarmers digital and data assets,” said Chaney.
From its origins in 1914 as a variety store in Collingwood, Victoria, Coles has grown to become a leading Australian retailer which sells everyday products including fresh food, groceries, household goods, liquor, fuel and financial services.
Sales in the Australian grocery and liquor industry have grown over the period of June 1985 to June 2018 by 6.2 per cent and 7.2 per cent per annum respectively.
As at 30 June 2018, Coles processed more than 21 million customer transactions on average each week, had more than 112,000 team members and operated 2,507 retail outlets nationally.
For the year ended 30th of June 2018, Coles had pro forma revenue of $39.3b and pro forma EBIT of $1,414 million.