The Motley Fool

Wesfarmers Ltd (ASX:WES) sells Quadrant Energy stake for US$170 million

Late on Wednesday, Wesfarmers Ltd (ASX: WES) announced that it was selling its 13.2% stake of Quadrant Energy to Santos Ltd (ASX: STO).

Quadrant is one of Australia’s leading oil and gas companies, with a portfolio of producing assets and prospective exploration targets.

The other shareholders include Brookfield Asset Management (36.2%), Macquarie Group Ltd (ASX: MQG) (21.8%), AMB Holdings (13.2%), CDPQ (12.1%) and Quadrant management (3.4%).

Santos is acquiring 100% of Quadrant Energy for US$2.15 billion plus potential contingent payments related to the Bedout Basin. Santos is funding it from existing cash resources and new committed debt facilities.

The Wesfarmers stake is being sold for approximately US$170 million. Once the transaction has been completed Wesfarmers has calculated a pre-tax profit of approximately US$98 million.

The transaction will also provide Wesfarmers a contingent value right in relation to the recent Dorado-1 oil discovery and royalty over Quadrant’s tenements in Western Australia’s Bedout Basin.

Wesfarmers Managing Director Rob Scott said “Our investment in Quadrant has demonstrated the benefits of Wesfarmers’ disciplined approach to portfolio management through flexible ownership structures.”

This sale adds to a number of strategic moves that Wesfarmers has made in recent months. It ended the Bunnings UK & Ireland expansion, sold Kmart Tyre & Auto and will soon be divesting Coles.

Wesfarmers is trading at around 19x FY19’s estimated earnings with a grossed-up dividend yield of 6.3%.

The conglomerate now has a lot of cash. With the rise in the share price I’d be cautious about jumping in today until we learn about what businesses or sectors Wesfarmers management will be concentrating on for future growth.

Until then, I’d rather buy shares of this top ASX growth share which just grew profit by around 30%.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now