Woolworths reveals details for Endeavour Group transformation

06 November, 2019 by Andy Young

Woolworths has mapped out its plans for its drinks business and share of ALH and the creation of a new entity within the group called Endeavour Group.

Shareholders will vote at the company’s AGM on 16 December on the first stage of the restructure which will see all assets and liabilities relating to the Woolworths drinks business and its 75 per cent ownership interest in ALH transferred to Endeavour Group.

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The second stage of the process will sees Woolworths look to complete the ALH merger. Upon completion of the ALH Merger, Endeavour Group will be 85.4 per cent owned by Woolworths and 14.6 per cent owned by Bruce Mathieson Group. The group said that the ALH Merger will not require shareholder approval.

Once stage two is completed Endeavour Group will be separated from Woolworths through a demerger or “other value accretive alternative”.

Woolworths Group Chairman, Gordon Cairns said: “In this new era of retail, the Restructure represents another step in the transformation of Woolworths Group. It will lead to the creation of Australia’s largest integrated retail drinks and hospitality business. On behalf of the Board, I encourage shareholders to read the Restructure Booklet and vote in favour of the Restructure Scheme at the EGM.”

In the restructure booklet, Cairns added: “The Directors unanimously recommend that you vote in favour of the Restructure Scheme Resolution at the Restructure Scheme Meeting. Each Director intends to vote any Shares she or he holds or controls in favour of the Restructure Scheme Resolution.

“Importantly, the Restructure Scheme will not: i) result in a change in the number of Shares that you hold; ii) cause any income tax consequences for you; or iii) negatively impact the ability of Woolworths to pay dividends.”

If the Restructure Scheme and ALH Merger proceed, Endeavour Group will be Australia’s largest integrated retail drinks and hospitality business, with around $10bn of sales and over $770m of EBITDA on a pro forma basis in the 2019 Financial Year.

Additionally Endeavour Group will hold 230 Dan Murphy’s stores, 1346 BWS stories and 328 hotel venues.

The booklet also breaks down the pro forma EBITDA by the components of the Endeavour Group, with 43 per cent coming from the Woolworths drinks business, 34 per cent from ALH Hotels and 23 per cent from ALH drinks business.

The timeline for the proposal says if the stage one shareholder vote goes in favour of the restructure that is expected to be implemented on 2 February 2020, the ALH merger will be completed on 4 February with the demerger or other process expected to be completed in the 2020 calendar year.