Australian supermarket giant Woolworths is set to start the execution of its plans to separate its Endeavour unit that includes its pubs and poker machine operations, as well as the bottle shop retailer Dan Murphy.
Today, the shareholders of Woolworths are set to vote on the first stage of the massive restructuring plan of the company under which a new listed entity is to be formed. The spin-off operator will be called Endeavour Group. The move is set to be executed as part of the complex three-stage plan for Endeavour’s spin-off that that company unveiled in July.
According to the Chief Operating Officer of Woolworths, it would be the largest and most complex transaction in the history of the Australian operator so far. The preliminary expectations show that a successful spin-off would make Endeavour the largest drinks and hospitality business on the territory of Australia, with its estimated revenue being worth around AU$10 billion and its earnings being worth AU$1 billion.
Apart from that, after the spin-off is complete, the new entity is set to control not only the beverage supplier Pinnacle Drinks but also the poker machine operations, hotels and nightclubs that are run by Woolworths’ subsidiary ALH Group. After the completion of the businesses’ separation, Woolworths will own 85.4% in Endeavour.
Supermarket Chain Has Faced Criticism for Pokie Machine Operations
Earlier this year, Woolworths has revealed its plans to separate its pokie operations from its major business and list Endeavour separately on the ASX. And still, the official separation of the food/drinks business from the poker machine operations has been considered a supplementary move, rather than a main focus of the changes.
At the time when the company revealed the plan in July, both investors and anti-gambling lobbyists welcomed the idea, despite the Chief Executive Officer of the company, Brad Banducci, tried to make the role that community pressure had on the decision smaller than it was.
In the few months before announcing its decision to merge its hospitality and liquor divisions with its hotels and gaming unit by the end of the calendar year, Woolworths has been facing a lot of criticism from anti-gambling campaigners and members of some local communities. In the activists’ opinion, the move would be beneficial for the company as it would provide it with a chance to back off from controversial poker machine operations that have been linked to a series of scandals, including irresponsible gambling, gambling addiction, potentially illegal gambling, etc.
On the other hand, Woolworths has been criticised by regulators for its pokie machines, with disciplinary action against two of its pubs run by the ALH unit started in June 2019 in the state of New South Wales. The disciplinary action was faced by the group due to complaints made by some whistleblowers who accused the company of both illegal and unethical behaviour.
- Author
Olivia Cole
