Wesfarmers completes sale of tyre business

Wesfarmers on Friday announced the completion of the sale of its Kmart Tyre and Auto Service (KTAS) business to Continental AG for $350 million.

Conditions of the sale, which was first announced on August 12, have all been satisfied, Wesfarmers said.

The sale is expected to add a pre-tax profit of approximately $270 million to the group’s half-year 2019 financial results, subject to finalisation of completion accounts.

Wesfarmers managing director Rob Scott said the sale was in the best interests of shareholders.

“With the sale now complete, I again thank the KTAS team for their efforts in growing and improving the business under Wesfarmers’ ownership and for their focus and commitment during the transition to new ownership,” he said.

The sale comes 11 years after Wesfarmers first acquired the business as part of its purchase of the Coles Group in 2007 and just two weeks ahead of a shareholder vote on Wesfarmers’ $20 billion proposed demerger of Coles.

In a report to shareholders released in October, Wesfarmers chairman Michael Chaney said that the group’s decision to spin off Coles into a separately listed entity would free up capital to invest in higher future earnings growth prospects.

Last month, Coles posted a 5.1 per cent increase in same-store food sales in the first quarter of fiscal 2019. The growth rate was higher than expected, thanks to a boost from the supermarket’s Little Shop promotion and its delayed plastic bag ban compared to rival Woolworths.

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