03/07/2007 - 22:00

Coles takeover will have a major effect

03/07/2007 - 22:00


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If it all goes ahead, Wesfarmers’ $22 billion takeover of Coles will make a fundamental difference to Western Australian business.

If it all goes ahead, Wesfarmers’ $22 billion takeover of Coles will make a fundamental difference to Western Australian business.

No, it won’t mean the retailing HQ will come here, nor will it result in any obvious shift of people or resources. But it does spread the power and influence.

This is much more about confidence and maturity, rather than the ego and bravado that lifted the state into the national consciousness two decades ago.

Robert Holmes a Court’s brazen bid for BHP Ltd put Perth on the map, but in the end it was for the wrong reasons. The pedal-to-the-metal entrepreneurs who characterised the 1980s were not building businesses in a sustainable way.

Another element of that time was the concerted efforts of the east coast establishment to thwart the upstarts from the west.

But in the longer term, that was not to be. Probably the most noteworthy shift in corporate recognition of WA’s place in the economy was the decision by Woodside Petroleum Ltd to move its headquarters from Melbourne to Perth in the mid 1990s.

The ‘business establishment’ could not overcome the rationale of a company benefiting both from nearness to its major operations and locating in the middle of its best talent pool. There were cost benefits as well, in those days.

Perhaps the same arguments could be made for Wesfarmers, as its business grows heavy in east coast assets.

Hopefully, it can continue to argue that it has all the talent it needs right here and that there are benefits to being located well off the radar of most of corporate Australia.

The takeover of Coles, though, may well change that.

The retailer has struggled for a long time against its arch rival, Woolworths Ltd.

Investors and analysts will be watching closely to see how Wesfarmers’ management discipline and retail acumen, as well as its experience at culture change and integration, work across a business that is actually bigger than it is.

For the state’s sake, I hope they are prepared for the challenge


Deal makers

For a long time, members of the corporate world in Perth have been at us to thoroughly examine the advisory sector and, in effect, rank them.

It’s a challenging task that requires a good working knowledge of both the transactions and the people involved.

Over the past few years we’ve grown our knowledge with our Deal of Year feature at the beginning of each calendar year, effectively analysing the capital raisings that went on in the market.

We’ve also provided a rudimentary ranking of the sector in our Book of Lists by way of staff numbers in this specialist field.

This week, though, our feature covers new ground. We’ve reviewed the mergers and acquisitions activity of the past 12 months to assess who the real players are in the market.

The results should not be that surprising for those who are the key players; typically they will know who their main competitors are.

But for those who watch this sector from the periphery, it is quite illuminating.

Firstly, it’s clear just how much of the action is stitched up by boutique local firms, proving just how isolated WA remains. Only Macquarie features in the top four. However, a number of national players have been involved in big transactions and, with the state booming, it’s more than likely that more players will seek to establish themselves here, rather than being hit-and-run players.


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