Wesfarmers drops IPO plan for Officeworks
It's back to the Wesfarmers camp for Officeworks managing director Mark Ward.
Wesfarmers has abandoned plans for a $1.5 billion float of Officeworks, citing the poor climate for initial public offerings.
"In light of current equity market conditions, Wesfarmers has determined that an IPO of Officeworks at this point in time would not realise appropriate value and would not be in the best interests of its shareholders," the company said in a statement.
Wesfarmers managing director Richard Goyder said the company was "comfortable retaining Officeworks in its portfolio and the business would be divested only if it was considered to be in the best interests of Wesfarmers' shareholders".
“Officeworks is well-positioned for future growth with a strong, competitive market position and ongoing initiatives to grow its addressable market,” he said.
The Australian Financial Review said that Wesfarmers may now try to sell Officeworks to trade buyers or spin off the business through a distribution deal to existing Wesfarmers shareholders, similar to Woolworths' $1.4 billion demerger of its property holdings into a separately listed company, Shopping Centres Australasia, in 2012.
In the March quarter, Officeworks' sales rose 9 per cent to $558 million after strong back-to-school sales, lifting revenues for the year-to-date by seven per cent to $1.48 billion.
Analysts believe Officeworks is on track to lift earnings by at least 6 per cent to $142 million this year and by 8 per cent to $153 million in 2018.