Wesfarmers share price rose slightly higher following news it had sold its Kmart Tyre and auto service.
Shares of Wesfarmers Ltd [ASX:WES] are trading at $50.75 in today’s market, up 1% at time of writing.
Wesfarmers revealed they had agreed to sell its Kmart Tyre and Auto service (KTAS) business to German based company Continental AG [ETR:CON].
KTAS is one of the Australia’s largest tyre, automotive and repair dealers. With 258 stores Australia wide, over 1,200 employees and approximated $405 million in full year revenue, placing KTAS with 8% of the market according to IBIS world.
The sale came only a week after Wesfarmers completed its exit from the coal industry by selling its 40% share in the Bengalla thermal coal mine to New Hope coal for $860 million.
Will KTAS sale affect Wesfarmers share price?
On Monday, Wesfarmers said that it expected to hit a pre-tax profit of about $270–$275 million on the deal.
The agreement was signed over the weekend after a three month long process which saw two key bidders, auto parts supplier Bapcor and competitor Repco drop out.
Continental will continue to use the KTAS name and logo, but is subject to certain conditions including approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
KTAS set to add value to Wesfarmers share price
WES’s Managing Director Rob Scott said the agreement to sell the tyre and auto service was one that could crystallise value for shareholders, saying:
‘We believe that divestment is in the best interest of Wesfarmers’ shareholders, while giving the employees and customers of KTAS the opportunity to join a highly complementary business in Continental. Continental’s automotive industry expertise will further strengthen the business’ customer offering,
‘I thank all of the KTAS team for their outstanding efforts in growing and improving the business under Wesfarmers’ ownership and, in advance, for their continued focus and commitment during the transition to new ownership.’
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