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Wesfarmers deal close

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.

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Wesfarmers (WES)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

BN30 Index

Index = 100 as of 4 Jan 2016
Source: Morningstar

Total Shareholder Return as at 31/08/18

1 year TSR5 year TSR
131stSeven Group Holdings68%29%
256thWesfarmers27%10%
448thMonadelphous-2%2%
576thAutomotive Holdings Group-22%-5%
782ndRCR Tomlinson-62%-13%
737 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

13/09/18
$0 Other
14/06/18
$47k Bought
05/04/18
$5k Issued
Total value as at the date of the transaction
Source: Morningstar

Revenue

1st-Wesfarmers$67,152.0m
2nd-Automotive Holdings Group$6,472.6m
3rd-Seven Group Holdings$3,411.5m
4th↑RCR Tomlinson$2,004.1m
5th-Monadelphous$1,742.2m
237 listed industrial companies ranked by revenue.
Source: Morningstar

Remuneration from Wesfarmers

4thGuy Russo$4.038m
16thRob Scott$1.908m
169thMichael Chaney$569k
Ranked by total remuneration from all listed WA companies

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