Supermarket reshuffle continues
The Canberra Times reports that Wesfarmers announced their intention to spin Coles off into a separate company. This would create a new top-30 company listed on the Australian Securities Exchange. Wesfarmers, with a market value over $45 billion, said the move would allow it to focus on growing its other divisions, which include Bunnings, Kmart, Target and Officeworks, and look for opportunities to buy new businesses. The Coles Group, bought by Wesfarmers in 2007, accounts for about 60 per cent of the conglomerate's tied-up capital but generates only 34 per cent of its earnings. Post the announcement Wesfarmers shares went up by 5%. This says a lot about market’s view of Coles’ long-term prospects.