Australian retailer Woolworths to sell $303 million stake in Endeavour Group

By Rishav Chatterjee

(Reuters) -Australian retailer Woolworths said on Wednesday that it would sell a 5% stake worth A$468 million ($302.84 million) in Endeavour Group, almost three years after spinning out the liquor store and pub operator.

The sale will happen via a block trade at a price of A$5.22 per share, Australia’s largest supermarket operator said, adding that it would now own about 4.1% of Endeavour, which it spun out as a separate company in 2021.

Shares of Woolworths slipped 0.4%, while those of Endeavour were down 5% in early trade.

Woolworths said it would use the proceeds from the selldown to return capital to its investors and provide an update in its full-year results on Aug. 28.

The grocer in January indicated that it no longer had “significant influence” over Endeavour after conducting a review on the 9.1% stake it held.

“We no longer believe that a material equity investment in Endeavour Group is required,” Woolworths’ outgoing CEO Brad Banducci said in a statement on Wednesday.

The retailer said it had no intention to sell its remaining interest in Endeavour but would continue to assess the stake.

Phillip Kimber, a retail analyst at E&P Capital, said Woolworths would now have more than A$1.5 billion to return capital to its shareholders, which would translate to over A$1.25 per share.

“The timing (of the stake sale) is however slightly unusual – being a few days before Endeavour’s third-quarter sales result,” he said.

Investment and advisory group Jarden is managing the block deal, Woolworths said, without disclosing the buyers of the shares.

Endeavour said on Wednesday it would continue its relationship with the Woolworths with a range of partnership agreements in place.

Woolworths in 2022 sold a stake worth A$636 million in the local hospitality operator, in what it said was a transition from owning Endeavour to becoming partners.

($1 = 1.5454 Australian dollars)