Woolworths’ merge and de-merge plans for EDG and ALH

Woolworths Group intends to amalgamate Endeavour Drinks Group and ALH Group into a single entity and then split the new business through a demerger “or other value-accretive alternative”.

The agreement to combine its drinks and hospitality businesses, Endeavour Drinks and ALH into a single entity is set to create Australia’s largest integrated drinks and hospitality business, with sales of approximately $10 billion and EBITDA of $1 billion.

The business will comprise over 1500 BWS and Dan Murphy’s retail drinks outlets and 327 ALH hotels.

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

BMG has agreed to swap its interest in ALH for a 14.6 per cent stake in the combined Endeavour Group, and will maintain board representation in the event that a demerger becomes effective.

Woolworths Group expects to retain a minority holding in a demerged Endeavour Group.

The separation is anticipated to take place in calendar year 2020.

The merger will create a single entity that is expected to be referred to as Endeavour Group.

As part of the separation process, Woolworths Group CFO David Marr will move to the new role of Woolworths Group Chief Operating Officer, with primary responsibility for overseeing the merger and subsequent separation of Endeavour Group.

Stephen Harrison, currently Finance Director at Australian Food, will take over from Marr as Woolworths Group CFO, effective August 1.

Endeavour Group is set to enjoy leading market positions, strong cash flow to fund investments in growth and an attractive and resilient revenue and earnings profile.

 

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