Coles (ASX:COL) has today announced an incorporated Joint Venture with Australian Venue Co (AVC) in relation to its hotels business, Spirit Hotels.
Coles will receive about $200 million in cash at completion, subject to certain conditions.
The move comes on the back of Coles strategic review of its Hotels business.
The company says AVC has been selected as a partner due to its strong reputation as an operator of hotel venues across Australia, as well as its experienced management team. AVC is majority owned US private equity firm Kohlberg Kravis Roberts (KKR).
Under the Joint Venture, AVC will manage the day-to-day operations of Spirit Hotels and will receive the 'economic benefit' of this business.
Meantime, Coles will manage the day-to-day operations of the 243 retail liquor stores in Queensland and 10 retail liquor stores attached to Spirit Hotels retail liquor stores in Western Australia and South Australia, receiving the 'economic benefit' of this business.
Coles says, the agreement with AVC will enable each party to bring relevant expertise to the joint venture. AVC has plans to grow the hotel portfolio in Queensland which will in turn provide Coles with the opportunity to further grow its Retail Liquor business in that state.
Shares in Coles Group (ASX:COL) are trading 0.75 per cent lower at $11.31.