Wesfarmers shares sink after $770m Coregas sale
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More news: Wesfarmers was one of the worst performing companies across the ASX 200 by afternoon trade as the conglomerate agreed to sell its Coregas business to Japan's Nippon Sanso for $770 million.
Wesfarmers shares were down 3.4% to $70.72 by 1pm AEDT, having advanced nearly 25% since January.
E&P Capital retail analyst Phillip Kimber noted that Wesfarmers received a "strong price" for Coregas, which is one of Australia’s largest manufacturers and suppliers of industrial gases.
However, Kimber said the deal is "largely immaterial" to the group overall and "broadly neutral" to E&P's earnings per share forecasts.
Wesfarmers to sell Coregas business for $770 million
The news: Conglomerate Wesfarmers has agreed to sell its Coregas business to Japan’s Nippon Sanso for $770 million.
The numbers: The deal will result in a pre-tax profit on sale in the range of $230 million to $260 million, the owner of the Bunnings and Officeworks retail chains said.
The context: Coregas is part of Wesfarmers’ industrial and safety division and the business is one of Australia’s largest manufacturers and suppliers of industrial gases.
Tokyo-listed Nippon Sanso is the world’s fourth-largest supplier of industrial, electronic and medical gases, including significant operations in Australia through its subsidiary Supagas.
Wesfarmers managing director Rob Scott said the Coregas divestment delivers value for shareholders and is consistent with the group’s disciplined focus on portfolio management. The sale is subject to the receipt of approvals, including from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
Scott said Wesfarmers will continue to invest in the remaining businesses in the industrial and safety division. Excluding Coregas, the remaining businesses in the division generated earnings before tax of $72 million in FY24.
The source: ASX announcement
