Wesfarmers Limited (ASX WES) Completed The Acquisition of Australian

Assignment Task

Question

On 19 April 2023, Wesfarmers Limited (ASX: WES), through its wholly-owned subsidiary Australian Pharmaceutical Industries Pty Ltd, proposed to acquire 100 percent of the outstanding shares of SILK Laser Australia Limited (ASX: SLA). Based on your own research, critically evaluate and analyze the acquisition of SILK Laser Australia Limited by Wesfarmers Limited. Your discussion should address but is not limited to the following questions.

1. What do you think are the economic rationales driving this acquisition for Wesfarmers? How did the share price of SILK react to the initial and subsequent acquisition offers by Wesfarmers? What can you infer from the price reaction as regards the underlying economic value of SILK?

2. Did Wesfarmers recognize any goodwill or bargain purchase gain arising from the acquisition of SILK? Based on AASB 3, apply the acquisition method and prepare an acquisition analysis to find out how much the goodwill or bargain is. Discuss any significant discrepancy between the assessed fair value and the amount at which these assets and liabilities are carried in the June 2023 statement of the financial position of SILK. Pay particular attention to the fair value of intangible assets acquired. [Hint: Refer to Wesfarmers' half-yearly report (February 2024) for information on the provisional fair value recognized on the acquisition of SILK.

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