Up to $2b for shareholders if Endeavour demerger approved in June

The Woolworths Group suggests a return of between $1.6 and $2 billion is possible for shareholders if the proposed $10 billion demerger between Woolworths and Endeavour group is approved by them at a meeting to be held in Sydney on 18 June.

It is the third and final stage in the demerger process, initially proposed in late 2019 but put on hold due to COVID. As part of the demerger, eligible shareholders will receive one new Endeavour Group share for every Woolworths Group share held at the time of the dermerger.

Woolworths Group Chairman, Gordon Cairns said the Board unanimously recommends that shareholders vote in favour of the demerger saying that it “will enhance shareholder value and it will create two leading ASX-listed companies. We believe both businesses, post demerger, have strong future prospects and will benefit from greater simplicity, focus and ongoing partnership.”

“We believe both businesses, post demerger, have strong future prospects and will benefit from greater simplicity, focus and ongoing partnership,” he said.

Woolworths and Endeavour will continue to partner on supply chain and stores, loyalty and fintech, digital and media, business support and international but that the demerger is intended to “enable Endeavour Group to realise its full potential with a clear purpose across Retail, Hotels and its broader business”.

Endeavour Group has also appointed a board which will become effective upon approval of the demerger. Endeavour Group Chairman-elect Peter Hearl said, “The Board includes a wealth of local and international experience, a diverse mix of backgrounds and complementary skills across fast moving consumer goods, hospitality, marketing, digital and technology, finance and strategy.”

Along with Hearl, CEO Steve Donohue and newly appointed CFO Shane Gannon, the Board wil be comprised of Holly Kramer, Bruce Mathieson Sr, Duncan Makeig, Joe Pollard, Colin Storrie and Catherine West.

Endeavour reported FY20 sales of $10.6 billion, an EBIT of $693 million and NPAT of $328 million. Endeavour owns just over 1600 retail stores, operates 330 hotels, significant digital assets and loyalty programs.

Endeavour will use its $2.5 billion of committed bank facilities to repay intercompany borrowings with Woolworths Group at the time of the demerger and to secure sufficient liquity to support the independent business’ funding requirements.