Wesfarmers Proposes $1.50 Per Share Capital Return and Special Dividend
Wesfarmers has announced a $1.50 per share capital management initiative, combining a $1.10 return of capital with a $0.40 fully-franked special dividend, pending shareholder approval at the upcoming AGM.
- Proposed $1.50 per share distribution totaling approximately $1.7 billion
- Distribution split into $1.10 return of capital and $0.40 fully-franked special dividend
- Subject to shareholder approval at 2025 Annual General Meeting
- Funded by proceeds from recent asset sales including Coles and Coregas divestments
- Tax treatment contingent on Australian Taxation Office Class Ruling
Wesfarmers Unveils Major Capital Return Plan
Wesfarmers has put forward a significant capital management proposal that, if approved, will see shareholders receive a total distribution of $1.50 per share. This initiative, announced on 28 August 2025, is designed to return approximately $1.7 billion to investors, reflecting the company’s strong balance sheet and commitment to delivering shareholder value.
The distribution is structured as a $1.10 return of capital complemented by a $0.40 fully-franked special dividend. This blend aims to balance efficient capital management with tax considerations, pending a final ruling from the Australian Taxation Office (ATO). The company has lodged an application for a Class Ruling to clarify the tax treatment, which is expected to confirm that most shareholders will not face immediate tax liabilities on the capital return component.
Funding Through Strategic Asset Sales
Wesfarmers’ ability to propose this sizeable distribution stems from cash inflows generated by recent divestments. Notably, the sale of its residual interest in Coles, along with the divestment of Coregas and WesCEF’s LPG and LNG distribution businesses, has bolstered the company’s liquidity. These strategic moves have enabled Wesfarmers to return capital to shareholders without compromising its credit ratings or financial flexibility.
Chief Financial Officer Anthony Gianotti emphasized that the initiative aligns with the company’s focus on maintaining a robust balance sheet while remaining poised to seize value-accretive opportunities. He reassured investors that the group expects to sustain its strong credit profile post-distribution.
Next Steps and Shareholder Considerations
The proposed capital return and special dividend are subject to shareholder approval at the 2025 Annual General Meeting scheduled for 30 October. Should shareholders endorse the plan, payments are anticipated to be made on 4 December 2025. Wesfarmers will provide detailed information in the Notice of Meeting and through additional communications, including a Tax Information Guide following the ATO’s Class Ruling.
For shareholders participating in the Dividend Investment Plan, the special dividend component will be eligible for reinvestment, offering a convenient option to compound their holdings.
While the capital return component is expected to reduce the cost base of shares for capital gains tax purposes, shareholders with a cost base lower than the capital component may realize a capital gain. The fully-franked special dividend will be treated as a normal dividend for tax purposes.
Implications for Investors and Market Watchers
This capital management initiative underscores Wesfarmers’ confidence in its financial position and strategic direction. It also signals a willingness to return excess capital to shareholders rather than retain it unnecessarily. Investors will be watching closely for the outcome of the AGM vote and the ATO’s Class Ruling, both of which will shape the final impact on shareholder returns and tax outcomes.
Bottom Line?
Wesfarmers’ capital return proposal sets the stage for a pivotal AGM and tax ruling that will define shareholder value in the months ahead.
Questions in the middle?
- Will shareholders approve the proposed $1.50 per share distribution at the AGM?
- How will the Australian Taxation Office’s Class Ruling affect the tax treatment for different shareholder groups?
- What impact will this capital return have on Wesfarmers’ future investment capacity and credit ratings?
