Woolworths Group Limited (‘Woolworths Group’) announced it would combine its drinks and hospitality businesses, Endeavour Drinks and ALH Group (‘ALH’) into a single entity expected to be referred to as Endeavour Group Limited (‘Endeavour Group’). Following the combination, Woolworths Group intends to pursue a separation of the business through a demerger or other value-accretive alternative. The separation is expected to take place in calendar year 2020.
The separation will allow Woolworths Group to benefit from a simplified organisational structure, a greater focus on its core food and everyday needs markets and opportunities to continue to build out the Woolworths Group retail ecosystem. Separation will also allow Endeavour Group to realise its full potential through business simplification and efficiencies with greater access to capital to pursue investment and growth, while retaining the benefits from a strong partnership with Woolworths Group.
The merger of Endeavour Drinks and ALH will create Australia’s largest integrated drinks and hospitality business with sales of approximately $10 billion and EBITDA1 of $1 billion. Endeavour Group will have leading market positions, strong cash flow to fund investments in growth and an attractive and resilient revenue and earnings profile. It will comprise highly integrated store-based and online offerings, with over 1,500 BWS and Dan Murphy’s retail drinks outlets and 327 ALH hotels. 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 to be included in the merger include Endeavour Drinks’ own and exclusive brands business, Pinnacle Drinks; Langton’s, a fine wine auction and retail business; Cellarmasters, a wine subscription business; and an 8.7% stake in ALE Property Group.