Investment bank working on Endeavour split pitch

Endeavour has Australia’s largest liquor store network under the Dan Murphy’s and BWS brands. Picture: Steven Saphore

Endeavour Group is once again catching the attention of investment bankers, and this time it’s not just to find a way to enhance its properties.

Apparently there’s at least one investment banking firm that has been working up a pitch to split the company, which may be separating its pubs business from its liquor operation.

The kingmaker in the deal is Bruce Mathieson, so any interested suitor would need to get him onside.

Who could the interested suitor be?

BGH Capital has weighed up an acquisition of Endeavour in the past when it was in the process of being spun out of Woolworths and there’s been some chatter in the market it may have had some revived interest of late.

It looked at the KKR business Australian Venue Co when it was up for sale last year.

Yet the unknown is how BGH would feel about the company now, given that its own investors are possibly getting increasingly jittery about any sort of exposure to companies which generate funds from gaming.

But perhaps the plan was for BGH to just buy the retail liquor operations – a category killer – and the Mathieson family keeps the rest, comprising the pubs and its properties.

Mr Mathieson, who owns 15.08 per cent, has been unhappy about the way Endeavour been run, and was understood to have been eager for his son, Bruce Jnr, to be at the helm.

He continues as a company director.

His love affair is known to have been with operating pubs, where he made his fortune, rather than owning the properties, but he is against any spin-off or sale by Endeavour of its property assets. That is likely because he does not see this as a way which will contribute to the company boosting its performance.

Yet unwinding pubs from liquor is complex, because of laws in Queensland requiring the two businesses to be owned together.

And Mr Mathieson’s focus is said to be on gaining control of properties in casino operator Star Entertainment, of which he is a shareholder, rather than giving any serious time to Endeavour.

When Endeavour was spun out of Woolworths in 2021 it was valued at $11bn and now it’s valued at $9.4bn.

The view of some is that it is trading at lower multiples than its peers.

In its results last month, Endeavour signalled that it was focused on maximising its property resources, which some took as a signal it was open to so-called “capital partnerships” with real estate groups to boost the value of its pub assets through development.

Endeavour’s property plant and equipment was valued at $2.2bn in its half-year accounts.

Earlier, some thought that if Endeavour traded as merely a liquor retailer, the stock might rerate.

Working for Endeavour over the past year has been investment banks Citi and Jarden, while the Mathieson family hired Luminis Partners.

Endeavour has Australia’s largest liquor store network under the Dan Murphy’s and BWS brands.

Overall, it has the largest portfolio of licensed hotels with a network of more than 1675 stores and 344 hotels.