1. News
July 4, 2019

Woolworths Group to separate drinks and hospitality businesses

Australian supermarket chain Woolworths Group has agreed to separate its drinks and hospitality businesses Endeavour Drinks and ALH Group.

Australian supermarket chain Woolworths Group has agreed to separate its drinks and hospitality businesses Endeavour Drinks and ALH Group.

Prior to separation, the retailer will merge the two businesses into a single entity, which will be known as Endeavour Group Limited.

The separation, which will be carried out ‘through a demerger or other value-accretive alternative,’ is expected to be completed next year.

The supermarket chain will focus on its core food and everyday needs markets, and opportunities through a simplified organisational structure. It will also be able to build out the Woolworths Group retail ecosystem.

Bruce Mathieson Group (BMG), which is a joint venture partner in ALH alongside Woolworths Group, has agreed to swap its interest in ALH for a 14.6% stake in Endeavour Group.

“The board believes that a merger of Endeavour Drinks and ALH followed by a separation is in shareholders’ best interests and will benefit customers and team members of both groups.”

Woolworths Group chair Gordon Cairns said: “The board believes that a merger of Endeavour Drinks and ALH followed by a separation is in shareholders’ best interests and will benefit customers and team members of both groups.

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“The decision has been taken after consideration of the future prospects of both businesses and how they can be best realised. It reflects the board’s focus on maximising long-term shareholder value.”

Endeavour Group will also become the largest integrated drinks and hospitality business with sales of approximately $10bn.

The new company will feature integrated store-based and online offerings, with more than 1,500 BWS and Dan Murphy’s retail drinks outlets, and 327 ALH hotels.

The ALH retail drinks outlets currently comprise approximately 35% of Woolworths Group retail drinks sales, with 86 Dan Murphy’s and 512 BWS stores owned by ALH at the end of March 2019.

Other businesses covered under the merger, include Endeavour Drinks’ brands business, Pinnacle Drinks, wine auction and retail business, Langton’s, a wine subscription business, Cellarmasters, and an 8.7% stake in ALE Property Group.

The merger is currently subject to final board approval, third party consents, regulatory approval and completion of the restructure. It is expected close in the second half of this year.

Woolworths Group expects to retain a minority interest in the demerged Endeavour Group.

Woolworths Group chief financial officer David Marr will become chief operating officer of the group and will be responsible for overseeing the merger and subsequent separation of Endeavour Group.

Australian Food finance director Stephen Harrison will replace Marr as the chief financial officer of Woolworths Group, effective 1 August.