The Woolworths Group Ltd (ASX: WOW) share price slipped into the red today after an important week for the large S&P/ASX 200 Index (ASX: XJO) share.
Woolworths shares closed on Friday trading for $34.31 apiece, a fall of 0.06%.
It comes after the company announced an asset sale and investment worth more than a combined $1 billion this week.
While it may be best known as a supermarket business, it's the other areas that Woolworths is invested in that have captured the headlines.
Further sale of its former liquor and hotels division
A few days ago, it announced that it was going to sell a 5.5% stake in Endeavour Group Ltd (ASX: EDV) through a block trade at a price of $6.46 per share.
Woolworths reminded investors that this sale still meant it retained an interest in Endeavour Group and "has no current invention to undertake a further selldown in the short-to-medium-term".
At the time, Woolworths said it doesn't have "any information that is not generally available that a reasonable person would expect to have a material effect on the price or value of Endeavour Group's securities".
Woolworths CEO Brad Banducci said:
Our decision to reduce our stake comes after a successful transition from ownership to partnership with Endeavour Group. The proceeds will be used for strategic investments and general corporate purposes.
Acquisition of majority of Petspiration
Woolworths quickly put the money to work by announcing the purchase of 55% of pet group Petspiration. This is the business that has a number of segments including PETstock retail stores (and other retail brands), vet clinics and grooming stations.
The cash purchase price of $586 million represents an enterprise value of 11x earnings before interest, tax, depreciation, and amortisation (EBITDA). The business generated $158 million of EBITDA in the 12 months to September 2022.
Woolworths said the investment is expected to deliver "strong returns" with an internal rate of return (IRR) in the "mid-teens" and there are identified value creation opportunities. In time, it could help profits and, in turn, the Woolworths share price.
Banducci said of the acquisition:
Specialty pet is a large and growing retail segment in which we have limited presence. We are delighted to be investing alongside founders, Shane and David Young, in Petspiration, the number two player in the segment. Specialty pet is a logical adjacency given the high penetration of pet ownership across Australia and New Zealand. The partnership will allow us to meet more of our customers' pet family needs with a complementary range of specialty pet products and services, strengthen the Everyday Rewards loyalty program and unlock opportunities for material value creation across both businesses.
Woolworths share price snapshot
Over the last month, the Woolworths share price has risen by around 2%. However, it is down 9% this year to date.
