RUMOURS surrounding the Officeworks IPO have proven to be true, as Wesfarmers confirmed this morning that its office supplies subsidiary will not float on the ASX.
In mid-February, Wesfarmers announced that it would be undertaking a strategic review of Officeworks and investigating its potential for an IPO.
However, in the face of a challenging retail market, Wesfarmers has pulled the plug on the idea, saying that it would not produce a good outcome for shareholders.
"In light of current equity market conditions, Wesfarmers has determined that an IPO of Officeworks at this point in time would not realise appropriate value and would not be in the best interests of its shareholders," the company release said.
Since Wesfarmers acquired the company back in 2007 as a part of its purchase of Coles Group, Officeworks has more than doubled its earnings and returns.
Officeworks generated $927 million worth of revenue in the most recent half, and grew its EBIT margin by 6.7 per cent to hit an EBITDA result of $74 million.
While an IPO isn't currently on the cards, Wesfarmers says Officeworks' market position is strong enough to sustain its growth in the future.
Wesfarmers shares have opened at $43.93 this morning.
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