Australia's Wesfarmers Ltd <WES.AX> on Monday said it would sell a 5.2% stake in Coles Group <COL.AX>, the supermarket chain it spun off in 2018, in a bid to retain a more flexible balance sheet amid uncertainty posed by the coronavirus outbreak.
In a statement, Managing Director Rob Scott said the "significant and unprecedented events of the past few weeks have highlighted the importance of balance sheet flexibility to support the Group in a range of economic circumstances."
As a result of the company's holding in the country's No. 2 grocery chain falling below 10%, Wesfarmers will no longer have the right to nominate a director to the Coles board, it said.
On Feb. 18, the retail-to-chemicals conglomerate sold off 4.9% of its holding in Coles, then suggesting it was a good opportunity to book some profits.
Since then, while the Australian stock index <.AXJO> has fallen by more than 27%, Coles' shares have clocked a marginal rise as panic-buying of essentials and other house-hold items due to the outbreak and subsequent lockdown offers a boost to retailers.
The company said the divestment offered an "attractive return" for shareholders, adding it was pleased with the performance of Coles since the demerger.
The two companies will continue their flybuys loyalty programme joint venture, with both groups retaining a 50% interest in the business, Wesfarmers added.
(Reporting by Rashmi Ashok in Bengaluru; Editing by Toby Chopra)
