"...also more important who is going to want to take this on, and for what price?"
Not sure what you mean by that, if you are Wesfarmer shareholder you are already "taking this on"
Which begs the question, "Why is WES doing this?"
The answer, I am convinced, lies in the fact that the WES board is of the view that either Coles or Bunnings (but probably both), are not being fairly valued by the market.
Simplistically:
For all intents and purposes, WES can be viewed as comprising Bunnings (40% of EBIT) and Coles (35% of EBIT).
Currently, WES is valued by the market at around 8.5x EV/EBITDA.
By comparison, WOW is trading at around 10x EV/EBITDA
If one was to argue - and I don't think it is an outrageously illogical argument - that Coles and Woolworths are essentially very similar businesses in terms of their financial pedigree, growth opportunities, competitive position, industry challenges, etc., then it follows that when Coles is spun out, it should trade close to 10x EV/EBITDA (especially if one builds in the likelihood of some sort of takeover premium for Coles standalone)
So, if WES (including) is currently trading at 8.5x EV/EBITDA and Coles, standalone, will trade closer to 10x EV/EBITDA. then makret is currently valuing the non-Coles businesses within WES (i.e., Bunnings, mainly) at a multiple well below 8.0x EV/EBITDA, probably closer to 7.5x, by my maths.
And, I don't know about you, but if I was offered a collection of Bunnings, Officeworks, WES' Industrials business etc for 7.5x EV/EBITDA, I would buy as much of it as I could.
So I think WES ex-Coles re-rates to a multiple to a multiple of at least 10x EV/EBITDA (because Bunnings itself is a 13x to 14x EV/EBITDA business).
And that, I think, is the valuation logic being applied by WES directors in this case.
I'm a big fan of de-mergers (for the right reasons), because I think they have the ability to unlock significant latent shareholder value (eg., ORA ex-AMC, DLX ex-ORI, CYB ex-NAB).
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