Wesfarmers (ASX:WES) to Divest Coregas to Nippon Sanso Holdings for $770 Million

December 20, 2024 01:44 PM AEDT | By Team Kalkine Media

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Wesfarmers (ASX:WES) to Divest Coregas to Nippon Sanso Holdings for $770 Million — Image source: shutterstock

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Highlights

Wesfarmers (WES) plans to divest Coregas to Nippon Sanso Holdings for $770m.

The deal is subject to regulatory approvals and expected to conclude by mid-2025.

Coregas is a key supplier of industrial, medical, and specialty gases in Australia.

Wesfarmers (ASX:WES), a leading Australian conglomerate, has entered into an agreement to sell its Coregas business to Nippon Sanso Holdings Corporation (NSHD) for $770 million. The transaction aligns with Wesfarmers' strategic focus on portfolio management and optimizing shareholder returns.

The sale remains subject to regulatory approvals from the Australian Competition and Consumer Commission and the Foreign Investment Review Board. If all conditions are met, the deal is anticipated to be finalized by mid-2025. Upon completion, Wesfarmers expects to record a pre-tax profit ranging between $230 million and $260 million, subject to adjustments.

Coregas, part of Wesfarmers' Industrial and Safety division, is one of the largest suppliers of industrial, medical, and specialty gases in Australia. The company provides a wide range of gas solutions, including bulk gases for medium and large users, as well as cylinder gases distributed across Australia and New Zealand. Coregas has played a vital role in catering to industries requiring high-quality gases for medical, industrial, and specialty applications.

Nippon Sanso Holdings (NSHD), listed on the Tokyo Stock Exchange, is a global leader in the gas supply industry. With a presence in over 30 countries, NSHD specializes in industrial, electronic, and medical gases. In Australia, its subsidiary Supagas Pty Ltd already holds a prominent position in the liquefied petroleum gas and gas distribution markets. The acquisition of Coregas will strengthen NSHD's footprint in the region and enhance its product offerings.

Despite the sale of Coregas, Wesfarmers plans to maintain its Industrial and Safety division, which will continue to operate its Blackwoods and Workwear Group businesses. Excluding Coregas, this division reported earnings before tax of $72 million in the 2024 financial year.

The transaction is considered a significant step in refining Wesfarmers' portfolio while enabling Coregas to expand its capabilities under the ownership of a global industry leader like NSHD. With the deal subject to approval, both companies aim to ensure a seamless transition to benefit their respective operations and stakeholders.

This move highlights the evolving strategies of both companies to strengthen their respective market positions while leveraging growth opportunities within the industrial and medical gas sectors.

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