DEALTALK-CSR move may herald return of Australian spin-offs

* More Australian companies may undertake demergers

* Share price performance post demerger impressive

* Orica, Qantas, seen among companies that may demerge units

By Denny Thomas

SYDNEY, June 23 (Reuters) - 'Demerge and flourish' may well become the mantra for several prominent Australian companies.

Following local conglomerate CSR Ltd's (CSR.AX) recent demerger move, and the consequent strong showing of its shares, investment bankers are dusting off their old files and pitching similar ideas to corporates managing a portfolio of companies.

The message is simple: spin-offs unlock value for shareholders, who prefer distinct companies to conglomerates, which are an amalgamation of disparate businesses.

"Generally, there is a perception that investors these days would like to have more focused businesses," said Rohan Walsh, a fund manager with Karara Capital.

Conglomerates in Australia typically trade at about 15 percent discount to single-focused firms, analysts have said.

Companies with demerger potential include conglomerate Wesfarmers Ltd (WES.AX), financial firm Suncorp-Metway Ltd (SUN.AX), airline Qantas Ltd (QAN.AX), brewer Foster's Group Ltd (FGL.AX), and explosives maker Orica Ltd (ORI.AX), bankers, who are advising on demergers, and analysts say.

The bankers did not want to be identified because the deals are not public yet.

Qantas has flagged its intention to float its frequent flyer business and Orica has looked at spinning off its consumer products business. There is talk that Suncorp could split its banking division and Foster's could demerge its wine division. Turbulent stock markets have delayed the execution of some of these plans, but bankers expect CSR's move will revive the trend.

"Companies have been forced to be disciplined and focused about the businesses they have and how the market values them. So you could see more demerger activities," said Simon Ranson, head of M&A at Citigroup.

Wesfarmers, which owns businesses from coal to supermarkets, has so far resisted spinning off businesses but pressure on it for a restructuring is growing. Merrill Lynch analyst David Errington has called for Wesfarmers to be broken into five separately listed companies.

"We have no demerger plans," a Wesfarmers spokesman said. [nSYU006733].