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Woolies to divest from pokies and liquor businesses

Fri, Jul 5, 3:44pm by Staff Writer

Australian supermarket heavyweight Woolworths will combine its liquor and hospitality businesses before divesting them in the next financial year. reports that Woolies will merge Endeavour Drinks, which includes Dan Murphy’s and BWS, with the hotels and gaming-focused ALH Group by the end of the calendar year, to create a stand=alone business called Endeavour Group.

“Following the combination, Woolworths Group intends to pursue a separation of the business through a demerger or other value-accretive alternative…in calendar year 2020,” the company said on Wednesday.

Woolworths did not say whether it plans to sell or list the new business, although it does expect to retain a minority shareholding whichever route it takes.

Woolworths, which has already offloaded its petrol business, said the separation will create a simplified structure and a greater focus on its core food and everyday needs markets.

“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 chairman Gordon Cairns said.

Endeavour Drinks and ALH together were responsible for more than 30 per cent of Woolworths’ earnings in the last financial year, with Endeavour Drinks the group’s second-largest contributor after Australian supermarkets in terms of both sales and earnings.

The integrated Endeavour Group will comprise of more than 1500 BWS and Dan Murphy’s retail drinks outlets and 327 ALH hotels and neighbourhood pubs.

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 per cent stake in ALE Property Group.

Bruce Mathieson Group, the junior partner in the ALH joint venture that includes hotels and pokies, will swap its 25 per cent stake for a 14.6 per cent interest in the new Endeavour Group.

Woolworths and ALH connection comes under fire

In May, Woolworths’ pokies business has come under the spotlight again, with Yahoo Finance reporting that major shareholder Perpetual Investments is putting pressure on the company to rid its store of all gambling machines.

The push has since taken on a life of its own.

Not only because of shareholder concerns, but as a result of last year’s report on Woolworths’ misuse of the pokies.

The list of complaints included details recorded of bettors’ activities and bribing high-value customers with free drinks to gamble more.

Woolworths has been a business in Australia since 1924 and has grown consistently.

The New South Wales-based company employs more than 115,000 workers and claimed $56.7 billion in revenue in 2018.

The Woolworths Group parent company has the strongest ties to pokies.

In fact, the company is the largest hotel and gaming pokies operator in Australia.

In 2005, Woolworths expanded into the hotel industry, partnering with ALH Group to acquire properties.

ALH (Australian Leisure and Hospitality), is Australia’s largest pokies operator and incorporated pokies into their properties.

Those machines subsequently ended up comprising a significant portion of overall revenue.

As it stands, Woolworths owns 75 per cent of the ALH Group, which operates more than 12,650 pokies throughout Australia.

Those machines generate $1.2 billion in net revenue annually, Casino Australia reports.

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