WES - Wesfarmers Limited

[chops_a_must]

Both WES and CGJ are in a trading halt.

You would expect that this means the coles board have accepted the offer, as WOW aren't in a trading halt. Shall be interesting none the less.

 

[Bluebeard]

Anyone reckon that 12 months down the track Woolworths will line up with a bevy of private equity groups and try and knock over Wesfarmers now. For Woolworths theyd have the opportunity in one grab to nail Bunnings, Target and Officeworks whilst letting the private equity teams take over the rest of the Westfarmers group including the supermarkets, Kmart, the gas, coal businesses and the other bits and pieces theyve got.

 

[morlock]

Bluebeard - How would woolies benefit from doing so? If they were interested, why not bid for Coles?

I doubt Wesfarmers would sell.

 

[CanOz]

Anyone reckon that 12 months down the track Woolworths will line up with a bevy of private equity groups and try and knock over Wesfarmers now. For Woolworths theyd have the opportunity in one grab to nail Bunnings, Target and Officeworks whilst letting the private equity teams take over the rest of the Westfarmers group including the supermarkets, Kmart, the gas, coal businesses and the other bits and pieces theyve got.

I think the ACCC might get a bit cranky about that one. There's far too little competition in the retail food industry as is, i can't even imagine the two fo them together...those poor suppliers.

Cheers,

 

[Buster]

Hey Fella's,

I'm no expert but it seems to me that WES may be paying a little too much for Coles etc.. The blogs all call the hedge fund mess in the US the reason why many of the Private Equity mobs walked away, but there were quite a few interested parties sniffing around initially and they all turned thier nose up..

I'm tipping that the WES SP will soon return to the levels prior to the announcement that they were bidding for Coles, and may even slip further if the real reason the Private Equity mobs shunned the deal was because the books contained some creative accounting with some wishful thinking thrown in..

Just my .2c anyway..

Regards,

Buster.

 

[reece55]

Well, we will only know in due course......

And in reality, if they are paying too much, it's majority scrip, so it shouldn't be a problem.

Put it this way, they are the private equity group on the ASX that you can actually buy - great brands and who knows, maybe there are synergies here that WES can capture by co branding, rationalization, etc.

Still, love it how the guys painted the spin - first page "it's value accretive". Yep, ok, based on your DCF model, a tad subjective don't you think? At the moment, it is definitely value destructive in the interim (i.e. they are paying a much higher multiple based on future maintainable profits IMO).

This is likely to dampen WES's share price performance till at least October IMO until the scheme meeting goes through. However, in the future, they could really turn the old Coles Group around. I mean, how bad can you really do with the number 2 position in supermarkets in Australia - it's really a recipe to make money if you strategically manage it right!!!

Cheers

 

[Sprinter79]

Coles needs more shopfronts, more exposure. WES can use some the land associated with Bunnings and the mob that looks after that holding can free some up. Just around my place, there is a huge Bunnings with a massive carpark PLUS an underground carpark that doesn't get used. I can see a Coles getting put there, considering that there are 4 Woolies and only 1 Coles in a stone's throw of where I live.

 

[ROE]

WES is paying too much for this dog and I think Goyder makes a big mistake
and this would be the beginning of the end for him.

to make Coles profitable they have to growth it by 15% a year for a while
retailing is a very competitive in order for them to growth that fast they have to steal Woolies customers and I dont think they can do that in any time soon.

it has to be some sort of price war going on to steal customers plus according to Woolies ex-CEO Coles and WES dont have an efficient IT and Logistic system in place and they are far behind Woolies in that area.

I work in IT and I can tell you it's a very very difficult job to integrate IT systems and make them work efficiently ..it takes many years of hard work and trial and errors...and I think Goyder may think it's an easy job to undertake but he will soon find out it's a daunting job and with IT skills shortage nation wide where is he going to find the people?

 

[Garpal Gumnut]

I'm a bit more bullish on WES than many on this thread. I'm thinking of adding to my holdings at the 50% retracement from the Aug 2006 low to the recent high. Any ideas from a technical viewpoint on this strategy.

Garpal

 

[theasxgorilla]

I'm a bit more bullish on WES than many on this thread. I'm thinking of adding to my holdings at the 50% retracement from the Aug 2006 low to the recent high. Any ideas from a technical viewpoint on this strategy.

Garpal

The strategy has merit, in the sense that if you buy a confirmed low at around the 38.2% to 50% retracement level you are probably entering at a good R/R level. But volatility is way up in this giant ATM and the price action of the last few days has been volatility in the wrong direction, representing risk to my position!

I'm fully loaded on this one...and got in early with the large part of my position, but if i wasn't loaded already I would not be adding to my position. WES is a battleground and its not difficult to see who won the last round.

IF prices stablised and went sideways around the 38.2% or 50% level you describe, then took off again I might add to the position (if I were you) as it takes off and confirms the low...but I'd need to see a confirmed low around these areas before committing more to this one. Buying blindly at this level regarless of confirmed lows, comfirmed holding of support and a confirmed strong upward movement (through signficiant resistance???) out of the low would not suit me.

Key (as always) are the real support/resistance levels. In this instance the 50% level co-incides with real major support/resistance at $40.10 (represented by the pink line). It will be interesting to see if price pulls up at this level...as it clearly has not respected the two prior levels, one of which included the previous ALL TIME HIGH...and the all time highest daily close. Price below the red line is terminal IMO, but I'll be out before then!

 

[Garpal Gumnut]

Key (as always) are the real support/resistance levels. In this instance the 50% level co-incides with real major support/resistance at $40.10 (represented by the pink line). It will be interesting to see if price pulls up at this level...as it clearly has not respected the two prior levels, one of which included the previous ALL TIME HIGH...and the all time highest daily close. Price below the red line is terminal IMO, but I'll be out before then!

Thanks asxgorilla,

I did a semilog chart on WES back to 1990 on monthly data.

It seems to have travelled in a channel as per attached chart. Its spent over 2 years recently travelling nowhere in a consolidation pattern, and in the process moving "down" this channel.

The lower parallel line may be a good indicator of when to get out if it doesn't continue its upward trajectory.

Interestingly it seems to respect "zero" numbers 10, 20, 30, 40 where they function as resistance and support for WES.

Trade well.

Garpal

 

[Garpal Gumnut]

I continue to look at WES and for a few moments last week on all the negative fundamental news considered selling out.

Then I looked at the charts again.

Its now at a 38% retracement from Aug 2006 and approaching a previous resistance level.

The first chart below shows this.

The second continues on my theme of channels with WES, on a weekly chart.

I've a longer term view on trading/investing than many on the forum., so my view is skewed to longer term.

The 50% retracement would be about $39, at which it has previously shown resistance. I may add to my holdings between $37 and $39.

Garpal

 

[theasxgorilla]

For a giant like WES to breakout like it did was a God-send IMO. So in one sense this retracement ought not be that much of a surprise. Yet no matter which way you cut it the current price activity is negative. My positions are still in the black, but it doesn't help psychologically that they were really in the black before!

 

[Julia]

I suspect their will be some hesitation about buying in WES until it becomes clear that the Coles takeover is going to be definitely advantageous.
If WES can indeed turn Coles into the sort of success story that is Bunnings, then both should be worth having. In the meantime, I'll stick with WOW.

 

[clowboy]

I suspect their will be some hesitation about buying in WES until it becomes clear that the Coles takeover is going to be definitely advantageous.
If WES can indeed turn Coles into the sort of success story that is Bunnings, then both should be worth having. In the meantime, I'll stick with WOW.

To early really yo be factoring coles into the eqation, I mean at this stage the deal isnt even a go. The CEO of westfarmers seems dead set on it though, think there will be much turbulance with the westfarmers share price over the next few years.

One thing I hold against wesfarmers is I dont BELIEVE they have factored the true amount of time and money needed to turn coles around, however they are the kind of company to be in it for the long haul.

 

[ROE]

To early really yo be factoring coles into the eqation, I mean at this stage the deal isnt even a go. The CEO of westfarmers seems dead set on it though, think there will be much turbulance with the westfarmers share price over the next few years.

One thing I hold against wesfarmers is I dont BELIEVE they have factored the true amount of time and money needed to turn coles around, however they are the kind of company to be in it for the long haul.

I don't think WES can pull the deal off at the current closing price.
Both party can pull out at any time if WES trading at the current level or below in near future and the reprice of debt risk may make WES reconsider

 

[GRaeN]

Hi guys, my first post!

What do you think about buying into WES now?

To my novice eye I think it is about to improve in share price, especially with the ex-dividend date approaching, and the Coles purchase seeming to near completion.

Interested in hearing your thoughts.

GRaeN

 

[Fool]

hey Graen,

yeah I im long on WES with a cfd. the dividend will be nice, especially considering cfd's get it the day after ex date

Hi guys, my first post!

What do you think about buying into WES now?

To my novice eye I think it is about to improve in share price, especially with the ex-dividend date approaching, and the Coles purchase seeming to near completion.

Interested in hearing your thoughts.

GRaeN

 

[ta2693]

hey Graen,

yeah I im long on WES with a cfd. the dividend will be nice, especially considering cfd's get it the day after ex date

I do not get it. would the price of CFD be decreased after ex date. and the difference is same as the dividend you get?

 

[Fool]

yeah it drops but its all about timing, when you get in and when you get out, i think watch tomorrow for a good chance to get it, US futures are falling...

i will be watching for about $43.40s