Richard Goyder, the Chief Executive of Wesfarmers, the Australian conglomerate best known for its ownership of retail outlets like Coles and Bunnings, says the company has been exploring investment options in the agribusiness sector that shows great prospects for growth.
According to the article on ABC, Wesfarmers — celebrating its centenary this year — has a total of $3 billion to spend on a new acquisition.
“The total proceeds were $3 billion but we’ll have some tax to pay on the proceeds and we’ll also need to ensure that following the sale our balance sheet ratios maintain an investment grade credit rating. The most important thing is the money is the shareholders’ money, so we’ll do with it what we think is in the best interest of our shareholders,” he said.
Pointing out the signing of the memorandum of understanding between West Australia’s Livestok Exporters and Chinese importers, Mr Goyder said that strong foreign investment will drive the sector forward and the company is more than willing to join in if an adequate investment opportunity appears.
“I think that’s a terrific thing in terms of Chinese investment indeed offshore investment, and I think you’ve also got (international dairy company) Parmalat investing in Harvey Fresh as well. Agribusiness, I think, has got great prospects as long as we get an efficient supply chain and we continue to innovate,” he said.
However, Mr Goyder stressed that the shareholders’ interests always come first, so if no such opportunity comes up, the company will strive to find new and efficient ways of returning the money to the shareholders.
“Wesfarmers would love to be a participant because we think it’s a growth sector. It’s whether we get the right opportunity to invest. We certainly think that food, over the long run, is one of these sectors with an unstoppable trend where there will be growth. It’s an area we look at, whether it’s an area where we’ll find anything that suits us time will tell,” he said.
“There’s been things of interest but nothing that’s made financial sense in our judgement, but we’ll continue to look at it because we think it’s probably going to be a high growth sector.”
Since Wesfarmers is already involved in agribusiness through its fertilizer business and Coles, Mr Goyder said that the company is focused on maintaining good and more direct relationships with suppliers so that customers get a better product in the end.
