The Coles (ASX: COL) share price is down 6.7% today, is it time to dump your Coles shares?
What is Coles?
Coles was split from the broader Wesfarmers conglomerate (which owns Bunnings Warehouse) in November 2018 after 10 years of ownership. However, the Coles name has operated in Australia for 100 years. Today, Coles is one of the largest retailers in the country, serving 21 million customers per week across its supermarkets, Coles Express, Online, Vintage Choice and others.
Why is Coles down?
Former owner Wesfarmers (ASX: WES) has announced that it has completed the share sale of a 5.2% of Coles for $15.39 per share, meaning that its interest has now fallen below 20% and the relationship deed will terminate with Wesfarmers no longer having the right to nominate a director for the Coles Board.
The sale improves Wesfarmers’ balance sheet. But what does it mean for Coles? Well, Wesfarmers has agreed to retain its remaining shares for at least 60 days.
Wesfarmers Managing Director Rob Scott said: “We have been pleased with the performance of Coles since the demerger and the very important role that Coles is providing, and will continue to provide, to Australian households during the COVID-19 crisis.”
Coles supermarkets continue to be an important part in supplying the public with their food and drinks requirements. I can understand why Wesfarmers wanted to sell so that its balance sheet remains strong. I wouldn’t sell Coles shares just because Wesfarmers is selling, but the panic buying may be over and it could be an idea to re-invest Wesfarmers cash into ASX shares at beaten-down prices like the below tech shares:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.