Wesfarmers Chickens Out and Share Price Drops 1.45%

Wesfarmers Ltd [ASX:WES] traded down 1.45% today, to a low of $4.30 per share.

What happened the the Wesfamers Share Price?

On 15 February, 2017, WES announced it had discussed the possibility of turning Officeworks into a separately listed company. This means Officeworks would be independent, but owned by WES. Similar to the Fairfax Media Ltd [ASX:FXJ] and Domain situation.

But this morning, the retail giant announced it would not consider spinning off Officeworks at this time. The company said the current climate for initial public offerings would not release an appropriate value for Officeworks. And therefore, it would not be in shareholders’ best interests.

ASX:WES in 2017 and beyond?

Reported by The Australian Financial Review:

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”.

I suggest you keep a close eye on WES. Investing in spinoffs is a great opportunity to buy into growth companies. The idea is that a spinoff could prosper due to a focused strategy, and management working to improve the company’s profitability.

While this doesn’t always result in share price growth, more often than not, spinoffs can be great investments.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

PS: If you want to lay down a little money on the hottest corner of the ASX right nowbut you dont know your way around the small-cap sectorthis report is for you. Get access now (free).


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