Woolies to spin off pokies

Liquor, gaming units to join before divestment

SUPERMARKET giant Woolworths is combining its liquor and hospitality businesses ahead of a divestment next year but insists it is not trying to distance itself from the gambling industry.

Woolies is Australia’s biggest pokie machine owner through its majority stake in ALH Group but will merge the hotels, pubs and pokies company with its Endeavour Drinks business by the end of 2019.

It will then separate the new stand-alone Endeavour Group, which will include the Dan Murphy’s and BWS liquor chains, by the end of 2020 through a demerger or other value-accretive alternative.

Woolworths did not say whether it plans to sell or list the new business, although it does expect to retain a minority shareholding regardless of the route it takes.

Wesfarmers pursued the latter option last year when it divested supermarket Coles, retaining a 15 per cent stake when it listed on the ASX.

Woolworths, which has already offloaded its petrol business, said the separation would create a simplified structure and a greater focus on its core food and everyday needs markets.

“The board believes that a merger of Endeavour Drinks and ALH followed by a separation is in shareholders’ best interests and will benefit customers and team members of both groups,” Woolworths chairman Gordon Cairns ( pictured) said.

Chief executive Brad Banducci told analysts the sale was not to distance Woolworths from gambling activities, despite the company facing pressure from activists to do so.

“It’s not about gaming, it’s about helping both businesses unlock their full potential,” Mr Banducci said.

Independent federal MP Andrew Wilkie was among those to welcome Woolworths’ planned exit from poker machines.

“Poker machines are a toxic product and any responsible business should have nothing to do with them,” he said.

“Poker machine money blood money.”

Endeavour Drinks and ALH together were responsible for more than 30 per cent of Woolworths’ earnings in the 2018 financial year, with Endeavour Drinks the group’s second-largest contributor after Australian supermarkets in terms of both sales and earnings.

The integrated Endeavour Group will comprise more than 1500 BWS and Dan Murphy’s retail drinks outlets and 327 ALH hotels and neighbourhood pubs. is