Takeover of Coles by Wesfarmers - The Scheme of Arrangement

Posted on Thursday, October 11, 2007
The proposed acquisition of CGJ by Wesfarmers Retail Holdings Limited (a wholly owned subsidiary of Wesfarmers Limited) will be by way of a scheme of arrangement. The scheme meeting will be held on 7 November 2007 with an Implementation Date of 23 November.

Under the scheme investors will receive the following consideration for each CGJ share held:-
$4.00 cash
0.14215 Wesfarmers ordinary shares
0.14215 Wesfarmers Partially Protected Shares (PPS)

Shareholders are able to elect to maximise the amount of cash they receive or maximise the number of Wesfarmers ordinary shares to be received as consideration. We will send a further email around to the MPS advisors with clients who hold CGJ shares once the election forms are received. A scale down on a pro rata basis may be required if valid maximum elections can not be satisfied in full.

The maximum elections only relate to the cash and ordinary share components of the consideration and therefore all holders will receive the PPS securities.  

CGJ shareholders will also receive the final CGJ dividend of $0.25 per share. This dividend will be paid regardless of whether the scheme proceeds.

Small CGJ shareholders
Shareholders with less than 100 CGJ shares can indicate on the election form that they wish to have all the Wesfarmers ordinary shares and PPS share consideration sold on ASX by the Sale Agent.

Taxation treatment
Scrip for Scrip CGT Roll-over relief will be available for the whole of the capital gain if the investor’s CGJ shares are exchanged for new Wesfarmers ordinary shares and PPS shares (ie under a successful maximum share election). A capital gain will apply to any cash consideration received.  

What are the PPS securities
The Wesfarmers Partially Protected Shares have the same rights as ordinary shares (including in respect to dividends) and will be reclassified as fully paid shares at a future date.

The PPS offer a level of downside price protection in certain circumstances as shareholders may, upon reclassification, be provided with additional ordinary shares. If the Wesfarmers ordinary share price is less than $45.00 at a date which is between four and four and a half years after the Implementation date, up to a maximum of 0.25 additional Wesfarmers ordinary shares will be issued for each PPS held. This will ensure that the value of the Wesfarmers ordinary shares issued to the investor on reclassification equals $45.00. No additional shares will be issued if the Wesfarmers share price is greater than $45.00.    

Proposed Timetable

For more information please contact your adviser on 07 4771 4527