WESFARMERS greatest protection, and arguably one of its greatest hindrances, is close to becoming a thing of the past.
WESFARMERS greatest protection, and arguably one of its greatest hindrances, is close to becoming a thing of the past.
The company is offering a scrip for scrip deal to Westralian Farmers Cooperative Limited, the Franked Income Fund and Westralian Farmers Cooperative Limited Investments – a joint coop and FIF body.
Between them, the FIF and the Cooperative owns 47.8 per cent of Wesfarmers.
Westralian Farmers Cooper-ative’s acquisition of CSBP in 1977 led to the 1984 creation of Wesfarmers Limited to give coop members a tradeable entity.
That acquisition meant the coop’s shares had an asset backing of around $10 but due to the Cooperative’s Act of 1943 were only worth $2.
Coop shares can only be sold back to the coop or to other coop members and hold a face value of $2.
Wesfarmers chairman Harry Perkins said Wesfarmers Limited was created to give coop shareholders more value and fend off any threats from corporate raiders such as Alan Bond, Robert Holmes a Court or John Roberts.
Mr Perkins said through the 1980s and part of the 1990s the company had been like a “babe in the jungle”.
“It could have been snapped up by anyone,” he said.
“Now it is mature enough for us to take the props away.”
By 1988 the coop share’s asset backing had risen so much, the FIF had to be created.
The fund made the WA con-glomerate virtually takeover proof.
Anyone making a play for Wesfarmers would first have to make a bid for the Wesfarmers Limited shares and then try and secure a part of the FIF holding.
FIF and Cooperative share-holders will be given Wesfarmers shares.
The ownership restructure deal still has to be accepted by the cooperative and FIF but that seems a fait accompli.
However, the split ownership was one of the reasons Wesfarmers was forced to walk away from its acquisition of Orica.
The asking price was about $3 billion but the FIF side of Wesfarmers was unable to come up with its share of the money.
JB Were manager principal WA Ron Bennetts said the move should make Wesfarmers ownership structure a lot clearer.
“Even today, some investors still see Wesfarmers as an agribusiness specialist,” Mr Bennetts said.
“This is another step towards the market recognising Wesfarmers as a company that is diversified as it is.”
Wesfarmers holdings include its traditional agribusiness, energy products such as coal and liquefied natural gas and transport, with its recent acquisition of Westrail’s freight business.