Packer to cash in on $12bn merger

THE Star casino and entertainment group has rolled the dice on a $12bn merger with Crown that would see beleaguered billionaire James Packer walk away as the big winner.

The proposal would keep both brands operating and would propel the new merged casino giant into the ASX’s top 50 companies with more than 30,000 employees nationally.

Crown Melbourne is already Victoria’s biggest singlesite private sector employer with more than 11,500 people working across the resort.

Mr Packer is Crown Resorts biggest shareholder with 37 per cent of the company and the proposal would allow him to cash in some of his chips.

The Star’s chief executive Matt Bekier said: “This would make us the BHP of gaming and entertainment and put us on the global map, which is where we need to be when borders open”.

Its proposal values Crown Resorts shares at more than $14 and tops offers from American private equity groups Blackstone and Oaktree which are also in the running to take it over. Any deal would have to be given the green light by gaming regulators in every state and the Australian Competition and Consumer Commission.

WOOLWORTHS will seek shareholder approval next month for a demerger of its drinks and hotels arm Endeavour Group, creating a new top 50 company on the ASX with a steady earnings stream and the promise of an attractive yield.

Woolworths said that following the demerger it will consider capital management options that could see it return between $1.6bn and $2bn to

Woolworths shareholders. The supermarket chain announced on Monday it had concluded a demerger was the most appropriate route for its near twoyear-old plan to separate Endeavour.

The corporate split will end a 60-year history of Woolworths selling liquor and brings to an end 16 years of a hotels joint venture with the Mathieson family, which saw the supermarket giant become the biggest hotels business in

Australia. Details of the planned demerger of Endeavour Group, which could be valued as high as $15bn when its shares are slated to list on the market on July 1, were released by Woolworths on Monday.

A 231-page demerger booklet sets out the future of both entities if the split is approved.

The demerger was first unveiled in mid-2019 but the emergence of the COVID-19 pandemic derailed the process. However with the equities market now booming, consumers brimming with confidence and household wealth on the rise, it could prove perfect timing for the spin-off.

Endeavour Group, which owns the flagship Dan Murphy’s liquor chain, BWS and a hotels joint venture with the Mathieson family, will come to the market with sales of more than $10bn and at a time when investors are hungry for yield.

It is promising a healthy dividend policy of a payout ratio of 70 per cent to 75 per cent of net profit.

The proposed demerger is the final step in a process that involved the combination of Woolworths Group’s drinks and hospitality businesses to form Endeavour Group through a restructure of Endeavour Drinks and subsequent merger with ALH Group.

If approved by shareholders at a meeting on June 18 and implemented the demerger will create two independent and leading ASX-listed companies, with Endeavour Group to be a top 50 ASX company.

Woolworths shareholders will retain all their existing Woolworths shares and eligible shareholders will receive one new Endeavour Group share for every Woolworths Group share held.

Woolworths and the Bruce Mathieson Group will each hold a 14.6 per cent interest in Endeavour Group at the time of the demerger.