Australia’s biggest grocer Woolworths (ASX:WOW)
is offering shareholders a payout worth up to $2 billion to green-light its demerger of the company’s beverages and hospitality division.
In addition to the special dividend, the grocery retail giant will also reward investors with an interest in a new ASX-listed entity trading as Endeavour Group, as existing shareholders will acquire one new share in the spin-off for each Woolworths share.
Woolworths will retain a 14.6 per cent stake in the new business, while hospitality tycoon Bruce Mathieson will hold a stake of the same amount in Endeavour.
The separation of the drinks and hospitality section from the supermarket chain is the outcome of a two-year restructuring operation, which saw Woolworths combined Dan Murphy’s, BWS and Woolworths Liquor with licensed venue operator ALH Group. The joint venture between the two complementary businesses has paved the way for Endeavour Group’s maturity for demerger.
The supermarket giant’s leadership has given its full endorsement of the demerger. The board promises the move will boost shareholder value, as Woolworth’s directors believe the two businesses will function with “greater simplicity, focus and ongoing partnership”, as separate ASX-listed stocks.
A shareholder referendum is scheduled to take place on June 18 to vote on the spin-off. Should it garner necessary support, the demerger will proceed by the end of FY21.
Shares in Woolworths are trading 2.5 per cent higher at $40.41