Woolworths Group Ltd (ASX: WOW) announced today that it would continue with the demerger of its liquor arm at the end of FY21.
Announced in 2019 and initially slated for completion in March 2020, Woolworths postponed the demerger at the onset of the COVID-19 pandemic. The company instead prioritised its response to the pandemic and the "uncertain operating environment".
What is Endeavour Group?
Woolworths created Endeavour Group out of a merger between Endeavour Drinks and ALH Group. Endeavour Drinks ran brand names such as Dan Murphy's and BWS, while ALH Group was responsible for the company's hotel and hospitality ventures.
Woolworths expects to gross over $1.1 billion from the spinoff.
Words from the chair
Commenting on the demerger, Woolworths chair Gordon Cairns provided the following quote.
Following the onset of the COVID-19 last year, our main priority was the safety of our customers, teams and communities. With the easing of operating restrictions and more resilient trading from Hotels than initially expected, we are now targeting June for separation.
The Board remains confident that a separation will maximise long-term shareholder value.
He added:
As previously announced, Peter Hearl has been appointed Chairman-elect of Endeavour Group and Steve Donohue has been appointed CEO-elect, subject to approval of the demerger. Further board and management announcements will be made in due course.
Woolworths share price snapshot
Over the past year, the Woolworths share price has fallen by 7.3%. Whilst having mostly recovered from their May 2020 lows of around $32, Woolworths shares are yet to reach their pre-COVID highs of around $43.
As reported earlier today, Woolworths announced its half-year results for FY21 this morning. The announcement saw the Woolworths share price rise 1.15% to $39.54.
Woolworths shares fell slightly in afternoon trade to close at $39.50. This is still a 1.05% rise compared to yesterday's close and an overall market fall of 0.9%.
