Australian conglomerate Wesfarmers is set to vote in favour of the multi-billion dollar proposed demerger of supermarket chain Coles following a meeting of its shareholders.

The Supreme Court of Western Australia has ordered for the shareholder meeting on 05 October.

Following the completion of the demerger, Wesfarmers shareholders will retain their shares as well as receive one Coles share for every Wesfarmers share they own.

According to Wesfarmers chairman Michael Chaney, the company’s directors unanimously recommended shareholders to vote their own shares in favour of the proposed demerger resolutions.

“Demerging Coles enhances Wesfarmers’ prospects of delivering satisfactory returns to shareholders by shifting our investment weighting and focus towards businesses with higher future earnings growth prospects.”

Chaney said: “Demerging Coles enhances Wesfarmers’ prospects of delivering satisfactory returns to shareholders by shifting our investment weighting and focus towards businesses with higher future earnings growth prospects.

“Following a successful turnaround since it was acquired by Wesfarmers in 2007, Coles is once again a leading Australian retailer, well positioned to grow as a defensive business with strong investment characteristics.”

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However, Wesfarmers plans to retain a 15% minority interest in the supermarket chain as well as a 50% interest in the flybuys joint venture with Coles.

In addition, the demerger is expected to create a new Australian company with presence in fresh food, groceries, liquor and convenience retail market.

Wesfarmers managing director Rob Scott said: “The demerger will reposition the Group’s portfolio to target a higher capital weighting towards businesses with strong future earnings growth prospects.

“After the demerger, Wesfarmers will have a portfolio of cash generative businesses, with strong returns on capital, good momentum and leading positions in their respective markets.”

Furthermore, Coles had entered into heads of agreement with Witron to establish two new automated distribution centres over a five-year period.