Woolworths To Sell 4.1% Stake In Endeavour, Expects To Generate AU$383 Million

Australia's biggest supermarket chain, Woolworths, is planning to sell its 4.1% stake in the Endeavour group via a block trade at a price of AU$5.23 per share, which is expected to raise AU$383 million.

The grocer announced that it will use the funds from the sale to acquire 35% stake in PFD Food Services, Reuters reported.

"Woolworths Group's agreement to sell its remaining shares in Endeavour Group and use the proceeds to fund the acquisition of PFD Food Services needs a better, clearer explanation," Ben Williamson, co-founder and co-CEO at trading platform InvestorHub, said.

As the news of the divestment emerged, Endeavour shares dropped by 2.4% to AU$5.21, while Woolworths traded at 0.5% higher.

The supermarket giant has been divesting from Endeavour for five years, selling AU$636 million in the hospitality operator in 2022. In May this year, Woolworths sold 5% of its stake in Endeavour for AU$486 million.

Endeavour, the owner of 275 Dan Murphy's stores, 1450 BWS shops and more than 300 hotels across the country, reported a 3.2% fall in annual profit, last week, reported The Nightly.

In 2019, Woolworths spun off Endeavour Drinks after merging its hospitality and liquor-related operations and held 85% of the stake.

The competition regulator permitted Woolworths to acquire 65% of PFD in 2021, despite concerns about the significant bargaining power the chain held.

The exit comes at the start of a new financial year, experiencing low trade and falling prospects in the liquor business.

"Woolworths should be aiming to ensure that shareholders have access to additional information behind the decision and the ability to voice their questions about the decision," Williamson said.