Two stocks to sell – Wesfarmers Ltd and AGL Energy Ltd
Withdrawal of Office works IPO: Recently, the group has undertaken a strategic review of Officeworks, which included a potential initial public offering (IPO) of the business announced on 15 February 2017. However, considering the current equity market conditions, the company has determined that an IPO of Officeworks in the current scenario would not realize appropriate value and postponed the IPO decision. Since acquiring the business in 2007, Officeworks has more than doubled its earnings and improved its return on capital from 5.7% in 2009 to 13.9% in H1FY17. Further, Officeworks is well positioned for future growth with a strong, competitive market position and ongoing initiatives to grow its addressable market. Moreover, the management indicated that the group is comfortable retaining Officeworks in its portfolio and the business would be divested only if it is in the best interests of Wesfarmers’ shareholders.
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