Endeavour Group ready to join pub buying spree: Bruce Mathieson

Woolies’ hotels and drinks spin-off is ready to stride into the white hot pub market with all guns blazing.

Australia’s pubs and booze supremo, billionaire Bruce Mathieson. Picture: Russell Shakespeare

An Endeavour Group unshackled from Woolworths will aggressively hunt for pub acquisitions in the face of competition from big names like Justin Hemmes and the Laundy family, according to billionaire major shareholder Bruce Mathieson.

Mr Mathieson said Endeavour had been “constrained” from joining in the pub and hotel buying spree in the past year but would now enter the market in a big way.

“We are 100 per cent in a different situation now and can be a lot more aggressive now that we are free [from Woolworths],” he said.

“I think people will be surprised by what we will buy. In fact, I know so.”

Endeavour will complete its separation from Woolworths on Thursday when the hotel, poker machine and liquor retail business starts trading on the ASX as a separately listed entity in one of the biggest floats of the year that could value it at $15bn.

Endeavour includes the Dan Murphys and BWS liquor chains, the ALH hotels and gaming machines business operated by Mr Mathieson’s family and speciality brands such as Langton’s fine wine and Cellarmasters.

Both Mr Mathieson and Woolworths will hold a 14.6 per cent stake in the business, which could be worth more than $1.8bn, depending on what Endeavour shares trade at. When it lists Endeavour will instantly become a top 50 company on the ASX. But Mr Mathieson forecast Endeavour would thrive in its own structure, unconstrained by the Woolworths balance sheet as it takes on the likes of Mr Hemmes, who has spent more than $200m on pubs in the past six months alone, and fellow acquisition-hungry billionaire Arthur Laundy.

“The good thing now is we will be completely independent and be able to concentrate more on our core business, particularly on the hotels side,” Mr Mathieson said. “People have underestimated hotels for so long that it is a joke. Hemmes and these other guys are not stupid – they are very smart.

“Almost 70 per cent of the pubs out there were built before the 1940s.

“They are not going anywhere and they don’t go out of fashion. It is not like having to get the latest piece of clothing. Johnnie Walker or Veuve Clicquot, they are always going to be there. You are not going to turn whisky into something electronic.

“People want to go to pubs. They want a meal, a drink, a punt and whatever else. It is a great industry and still full of potential.”

Mr Mathieson, a member of The List – Australia’s Richest 250 who bought his first pub in 1975, said he had enjoyed the 20-year business relationship with Woolworths, which started as a joint venture after he and former Woolies boss Roger Corbett met at the 2000 Sydney Olympics.

“It has been a wonderful relationship,” he said.

“It could have been even bigger, though that is by the by now.”

But he dismissed concerns that investors concerned about environmental, social and governance (ESG) issue would now shun ­Endeavour given it sells alcohol and has the biggest collection of poker machines in the country, and that supermarkets Woolworths had long been pressured to get out of poker machines.

“It is the greatest joke of all time,” he said. “There are about six agitators about poker machines in this country and they’ve all been around since about 1956. The question I have: is it a legal business? The government has strong legislation and requirements that we abide by, and if we do break the law we get in trouble. That is the way it should be. We act within the law.

“But what about the casinos? They have 100 per cent more problems than hotels. Should we sell nuts? They kill people. It is the same with crustaceans. They can be harmful. But no one ever talks about that.”

Mr Mathieson, who will sit on the Endeavour board as a non-executive director, played down concerns that he might sell part or all of his stake in the listed entity given he is not subject to any escrow conditions and that private equity groups had been keen on Endeavour before Woolworths announced the demerger in May.

“You’ll have to watch this space but I want to be clear that I think hospitality has an enormous long-term future and I want to be part of it,” he said. “It is my life and I have no other investment that I want to put my money into.

“There is property, restricted licences and it is a commodity that people across the world want to be a part of, liquor and gambling.

“I am more than a believer in this industry.”