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Graham's links with Wesfarmers go far beyond the role of director. He is a major shareholder of Gresham Partners, the financial advisory firm half owned by Wesfarmers
Wesfarmers executives use Gresham's offices as a landing point in Sydney and Gresham makes tens of millions dollars to advise Wesfarmers. Indeed, Gresham is one of the advisers on the split of Coles Wesfarmers; the fees to be collected on this transaction have not yet been publicly quantified.
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Wesfarmers President Michael Chaney and Graham are old friends. Graham was much more than a Wesfarmers director; he was part of his social fabric for two decades.
Apparently, Graham's name was the only one to be appointed to the Wesfarmers Nominating Committee (which is the entire Wesfarmers Board of Directors) to hold the position of President of Coles. The vote was unanimous
Strangely, Wesfarmers saw no problem and did not predict many questions from the media or investors about the independence of Graham
Wesfarmers on Monday named David Cheesewright his appointed director to the board of directors. Coles administration. . Having also called Graham a Wesfarmer candidate would have allowed Wesfarmers to have more influence on the Coles board than his 15% stake deserved.
To be fair, the issues surrounding Graham's appointment are more concerned with his independence than his ability to do the job. Graham is an old man with a lot of experience and knows Coles and retail very well thanks to his 20 years on the Wesfarmers board of directors
Photo: AAP
Over time, when Coles is fully established as a stand-alone business, the company is the only one of its kind. Wesfarmers influence decreases.
Even now, there is no compelling reason for Wesfarmers to retain a stake in Coles after the split – other than as a show of support. There is no such thing as escrow clauses attached to the Coles holding company, so it can be sold at any time – a point noted by Scott, who said Wesfarmers liked to retain strategic flexibility.
The most important link between Coles and Wesfarmers is the flybuys reward the entr the two will retain a 50% interest and will be managed as a joint venture. Other Wesfarmers retail activities like Bunnings, Kmart and Target are part of the flybuys program and its stock of data is very valuable for digital marketing efforts.
Meanwhile, shareholders of Wesfarmers, who will also be investors in Coles A little more than a taste of what they can expect in terms of dividends. Scott badured shareholders that in 2019, the dividends of Coles and Wesfarmers combined would be in line with what Wesfarmers would have delivered if it had not split with Coles.
The additional detail provided Monday has only cemented the opinion that Coles will be a performance game rather than a growth stock, with a dividend payout ratio of between 80 and 90 percent.
He will begin his independent life with a net debt of about $ 2 billion but with a need for some catch – up investment spending.
If it is badumed that Coles will generate a net profit of about $ 1 billion – about $ 800 to $ 900 million in dividends will be paid to shareholders.
Despite some questions from badysts, Scott badured them sheet equilibrium, net debt and capital positions would be cautious.
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