SPECIAL REPORT: How will the Coles split impact Wesfarmers shares?

Wesfarmers' management is significantly altering the group's DNA with the proposed demerger of grocer Coles, closing sometime in fiscal 2019 if approved by shareholders. There are aspects to like in the demerger, which will separate Coles from the core Bunnings home improvement retail stores. The two businesses—accounting for about two thirds of group EBIT—have very different growth prospects, and the split will provide the residual group with a greater capacity to engage in impactful M&A transactions given the smaller size and stronger balance sheet of Wesfarmers postdemerger. However, we can't see ...

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