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Speculation over Wesfarmers' succession plan

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John Gillam's recent, unexpected announcement that he was stepping down from his role as CEO of Bunnings has given rise to speculation as to who is in line for the top job at Wesfarmers when current CEO Richard Goyder retires.

The market remains confused by Gillam's actions. Not only has he chosen to leave the business just months after the acquisition of the UK's Homebase DIY chain, he was also in the running to succeed Goyder who is expected to announce his retirement in the first half of next year.

Rob Scott, the head of Wesfarmers' Industrial division and a former Olympic rower, is reportedly the favourite to take the helm. 

Richard Goyder is expected to become the chairman of the Australian Football League, where he currently holds the role of Commissioner.

The acquisition of Homebase by Bunnings brought criticism from some analysts, with David Errington, of Merrill Lynch, stating:

"We were critical toward Woolworths entering the Australian home improvement sector (via Masters), and we believe Wesfarmers entering the UK market (via Homebase) will be as equally a compromising decision for Wesfarmers as Masters was for Woolworths," he said." Paying $705 million for a business generating $40 million of EBIT [earnings before interest and tax] and where that business is smaller scale in a tough industry raises questions. And when a further $1 billion is being committed over the next five years to improve the business, we are highly sceptical." 

According to the Australian Financial Review, Gillam and Errington had a heated exchange at an investor strategy day as a result.

Recent Bunnings/Homebase news: 

Gillam's departure won't de-rail Homebase plans

Source : Insight DIY 

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12 December 2016

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