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Rob Scott rejects pressure to de-merge Bunnings

Rob Scott

Wesfarmers new chief executive Rob Scott has resisted investor pressure to de-merge the companies most valuable asset, the Home Improvement & Garden retail chain Bunnings.

In recent days, investors including John Sevior the founder of Airlie Funds Management  have ramped up pressure on the Wesfarmers board to release value for shareholders by de-merging Bunnings. The very successful chain currently generates 30% of total Wesfarmers earnings, but on its own could be worth as much as 23 billion Australian Dollars, almost half of Wesfarmers' total market value.

In one of his first interviews since replacing Richard Goyder, Mr Scott said for every investor calling for Bunnings to be sold there were others keen to see the home improvement powerhouse retained.

"I really welcome feedback from investors; I've had meetings with over 100 investors in recent months and I feel it's as important to listen as to talk at these meetings. What's clear at those meetings is there is a real range of views – for every one person that says we should consider selling Bunnings we have 10 people saying why we shouldn't. I'd say the weight of opinion from investors is they like Bunnings and they see that as a core part of our group going forward.

"Bunnings is a business that I think has really benefited from Wesfarmers ownership," he added, citing Bunnings ability to use Wesfarmers' balance sheet to ramp up new stores to thwart Woolworths' now-defunct Masters business. And it's a business where I see a lot of growth opportunities going forward," he said, detailing plans to expand Bunnings' digital and e-commerce reach.

Source: Insight DIY Team

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21 November 2017

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