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Shares in Wesfarmers are higher in Sydney on Monday following media reports the DIY-to-groceries conglomerate has started marketing the proposed spin-off of its office stationery and equipment division Officeworks.
Perth-based Wesfarmers’s three brokers – JPMorgan, Macquarie and UBS – sent detailed pre-initial public offering marketing reports to fund managers, the Australian Financial Review’s Street Talk column reported.
The business has been given an equity valuation of between A$1.14bn ($0.85bn) and A$1.52bn, according to the bottom-of-the-range estimate from JPMorgan and top-of-the-range forecast from UBS, respectively.
Shares were up 0.9 per cent at A$43.40, bouncing off Friday’s eight-week low. The benchmark S&P/ASX 200 had gained 0.2 per cent.
Wesfarmers in February told investors it had begun a strategic review of Officeworks to evaluate either an IPO or trade sale of the business. The group could soon find itself with a decent pile of cash stemming from the Officeworks spin-off, as well as its coal portfolio, which is also up for sale. Analysts think such cash could be used to reduce debt or defend margins in its flagship supermarket division.
Early last year, Wesfarmers announced it would transplant Bunnings, its successful line of do-it-yourself hardware stores, to the UK thanks to the £340m acquisition of Homebase.