@Gindaldan Your point 1, refers, namely "New large acquisition...

@Gindaldan

Your point 1, refers, namely "New large acquisition through less capital deployed on Coles. Maybe IPL? (Disclaimer - hold a lot of IPL via parents)".

With Net Debt approximately half of EBITDA, WES is under-geared, for sure.
Discussions have been raging for some time now as to what it is they might acquire.

This demerger doesn't change that much, except that it depends on the respective capital structures of Coles and WES (ex-Coles).

I suspect the bulk of the company's debt will end up with the mother ship, the reason being that Coles, standalone, can't really wear too much debt given its significant off-balance sheet liabilities.

But even if that is still the case, WES (ex-Coles) will still have meaningful balance sheet firepower for acquisitions.

But, when it comes to IPL, specifically, as a takeover target after the spinout of Coles, with all respect to your parents, IPL is a capital-intensive business, with no discernible competitive advantage, no control of either the price it charges for its products nor what it pays for most of the inputs to its business and, as a result, its earnings are highly volatile.

The market, I am sure, would therefore have a right royal conniption if it even heard whispers of WES having a go at something like an IPL. They may just as well buy some other inferior quality companies such as BSL or QBE or AMP (or TLS, for that matter).