wes vs wesn, page-6

WESN were issued as part of the Coles acquisition. To placate the Coles shareholders at that time, they were given a safety net to attract them into accepting WES shares as part of the deal. WESN are partially protected against negative movements in the WES share price i.e. at some point (2010 or 2011 I believe...trawl thru the announcements) when WESN shares convert to WES shares, if the WES share price is less than $36 (I recall), then WESN holders will get 1.25 shares for each WES share i.e. you get 0.25 shares as a bonus. Between $36 and $42 (or thereabouts, I recall), the additional shares issued are prorated up to 0 (zero) once the share price reaches $42.

In other words, some of the risk of Coles shareholders accepting the WESN share offer was reduced by the prospect of receiving more shares should the WES price be below $42 in x years time.

I believe WESN should be trading at a significant premium to WES at these levels. Why would you buy 1 WES share now when you can effectively buy 1.25 WES shares (through buying 1 WESN share) at roughly the same price on market. This is one of the many market anomolies we can exploit at the moment, if you have confidence in the Wesfarmers story.