Shareholders in retail giant Wesfarmers will vote next month on whether the $20 billion demerger of supermarket chain Coles will proceed.
The vote will take place at the conglomerate’s general meeting on November 15, with the anticipation Coles shares will be listed on the ASX on November 21, subject to regulatory approval.
Wesfarmers announced in March its plans to spin off Coles Group and list it on the ASX, while in August it said it would retain 15 per cent post-separation.
The Supreme Court of Western Australia gave the nod on Friday for the company to hold a shareholder meeting to vote on the planned spin-off.
The demerger will be effected by a scheme of arrangement, under which eligible shareholders will receive one Coles share for every Wesfarmers share held.
Wesfarmers shareholders will retain their shares in the company and its dividend policy will remain unchanged, the company said.
The plan will allow the Perth-based conglomerate to focus on generating cash for its leading stores moving forward, managing director Rob Scott said.
“After the demerger, Wesfarmers will have a portfolio of cash generative businesses with strong returns on capital, good momentum and leading positions in their respective markets,” he said in a statement on Friday.
“Maintaining a strategic stake in Coles provides an important connection with Wesfarmers to reinforce opportunities to collaborate in the data, digital and loyalty areas.”
Coles, bought by Wesfarmers in 2007, accounts for 60 per cent of the conglomerate’s employed capital, but only 34 per cent of earnings.
Wesfarmers suffered a 58 per cent drop in 2017/18 net profit after taking more than $1.3 billion in costs and losses on its disastrous Bunnings UK exit and a $300 million writedown on underperforming Target.
When the demerger was announced in March, Deustche Bank analyst Michael Simotas said it was a positive move.
He said it showed Wesfarmers managing director Rob Scott was taking an “active approach” to portfolio management.
The company resumed trading after its halt in anticipation of the announcement.
Its shares were up 0.2 per cent to $49.52 at 1342 AEST.