Woollies have announced that they will roll all their liquor operations into a single company which will then be sold off or floated in 2020.
Perhaps they want to remove the gambling out of their core business for PR purposes.
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I would say that the long term financial benefit to Woolworth and its shareholders is limited (the business may have reached maturity)…namely, they have extracted as much as they can from the business and their returns will be higher offloading rather than to keep trading.
I expect that Woolworths will retain an interest in the demerged company along with existing Woolworths shareholders…which is often the case in such situations.
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Not necessarily the only outcome. The ABC reported,
In a release to the ASX, the supermarket chain said it would package together its drinks, hospitality and gaming interests in the Endeavour Drinks and ALH Group businesses ahead of either a de-merger, or “other value accretive alternatives”, such as a trade sale, in 2020.
It might simply go to the highest bidder. Which ever outcome brings the greatest return to the shareholders, although the assets up for disposal have been very profitable to Woolworths.
Motivation.
Not a core business?
Reputation impact?
and
something a prominent share holder activist Stephen Mayne is pointing out. Woollies does not currently have direct control over the investments due to deal struck when they bought into the hotel gaming business.
“It is good to see Woolworths regularise the corporate structure of its pokies empire, diluting the power currently held by billionaire joint venture partner Bruce Mathieson, who owns 25 per cent of the current ALH structure but has management control,” Mr Mayne said.
P.S.
While Woolies offer free fruit for kids in their super markets, their hotel chain not to be left out was also offering up free drinks for frequent gamblers.
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