Aussie retail giant Wesfarmers Ltd (ASX: WES) could have a war chest of $12 billion to spend on acquisitions once it has divested the Coles supermarket business, according to an analysis by global investment bank CitiGroup.
Wesfarmers has been looking to offload a number of its businesses in recent times. It has sold its Curragh coal mine and also put an end to the UK & Ireland Bunnings expansion attempt. The conglomerate has also looked at selling Kmart Tyre & Auto and its hotel business.
After all the divestments are done, Citi believes that Wesfarmers would have the cash and debt facilities to fund $12 billion of acquisitions.
Citi has even done the homework for Wesfarmers and drawn up a list of potential targets such as Oil Search Limited (ASX: OSH), Caltex Australia Limited (ASX: CTX), BlueScope Steel Limited (ASX: BSL), Fletcher Building Limited (ASX: FBU), Incitec Pivot Ltd (ASX: IPL), DuluxGroup Limited (ASX: DLX), Qantas Airways Limited (ASX: QAN), Brambles Limited (ASX: BXB), Aurizon Holdings Ltd (ASX: AZJ), Downer EDI Limited (ASX: DOW), Sonic Healthcare Limited (ASX: SHL), REA Group Limited (ASX: REA) and TPG Telecom Ltd (ASX: TPM).
If what Citi says comes true, Wesfarmers could be a very different business in 12 months’ time.
The Wesfarmers share price was up 0.3% this morning following the release of a strategy presentation.
Wesfarmers seems to want to follow in the footsteps of Warren Buffett and grow through acquisitions. Download the free Aussie investing ebook, “What Buffett’s Investing Checklist Can Teach Aussie Investors“ when you join the free Rask Group Investor Club Newsletter. You’ll get insights into the 4 steps Buffett uses to pick shares.