Woolies raises $636m from Endeavour stake sell down

The retail giant scores $636m from the sell down of its stake in Endeavour, which owns Dan Murphy’s, BWS and 340-plus pubs.

Woolworths has raised $636m from the partial sale of its investment in $11.48bn Endeavour Group, which owns Dan Murphy’s, BWS and 340-plus pubs.

The retailer, which spun off Endeavour last year, said the capital will be used for strategic investments and general corporate purposes.

Woolworths, led by Brad Banducci, said the drinks group “remains an important partner”, with a range of long-term partnership agreements, and that there’s “no connection” to Woolworths remaining 9.1 per cent stake.

“Woolworths Group confirms that it does not possess 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,” the company told the ASX.

Woolworths sold 98.5 million Endeavour shares, equivalent to a 5.5 per cent stake, for $6.46 a share on Tuesday night via a block trade through investment bank UBS. It represented a narrow 3.6 per cent discount to Endeavour’s last traded price of $6.70.

The Sydney-based retailer said it has no current intention to undertake a further selldown in the short to medium term.

Dan Murphy’s boss Agi Pfeiffer-Smith outside a store.

Woolworths’ partial stake divestment comes as Endeavour snaps up individual pubs, with market chatter that more deals could be on the horizon.

Endeavour also faces 62 charges for allegedly operating gaming machines that didn’t have mandatory precommitment technology installed.

The technology, called YourPlay, gives consumers the ability to set time and spending limits to help them stay in control of their gambling.

The Victorian Gambling and Casino Control Commission last month said Endeavour’s Australian Leisure and Hospitality Group allegedly operated 220 gaming machines for up to five weeks without YourPlay functionality enabled.

Investors are also concerned that Endeavour will be hurt by increased regulation following a NSW National Crime Commission report that recently found “billions of dollars of dirty cash” was being funnelled through the state's poker machines.

The NCC has made a series of recommendations around poker machines, including the introduction of a mandatory cashless-gaming card and increased data collection.

“At the moment serious offenders can enter NSW pubs and clubs, sit down next to patrons in gaming rooms, and openly feed large sums of cash from their crimes into poker machines with no real fear of detection,” NSW Crime Commissioner Michael Barnes said in October.

In Endeavour’s most recent trading update on October 17, the group said it had strong trading in the first quarter across all key categories of bars, food, gaming and accommodation, with demand for meals particularly strong.

The company does not break out its earnings from gaming, which falls into its broader category of hotels. During the first quarter to October 2, revenue from hotels jumped nearly 91 per cent to $538m.

Endeavour shares dropped 4.3 per cent to $6.41, with Woolworths rising 0.6 per cent to $34.29 in a higher market on Wednesday.