Woolworths has released details of the spin-off of its grog business, Endeavour Drinks and shareholders could be in for multi-billion-dollar reward.
Early estimates suggest the special dividend could be as high as $2 billion, but a lot will depend on how the market is at the time.
The spin-off is due to happen in late June – IE by the end of the 2020-21 financial year.
Shareholders will receive one share in Endeavour for every one Woolworths share they own.
Following the demerger, Woolworths will look into returning between $1.6 billion and $2 billion to shareholders from the proceeds of the sale.
The company’s board has unanimously voted in favour of the demerger, which will require shareholder approval by way of a special meeting to be held on June 18.
“The Woolworths Group Board believes that a demerger of Endeavour Group will enhance shareholder value and it will create two leading ASX-listed companies,” Woolworths chairman Gordon Cairns said in a statement to the ASX on Monday.
“We believe both businesses, post demerger, have strong future prospects and will benefit from greater simplicity, focus and ongoing partnership,” Mr Cairns said.
Following the split-off, Woolworths will hold a 14.6% interest in the new Endeavour Group (with annual revenue of around $10 billion) alongside billionaire hotelier Bruce Mathieson due to his former 25% stake in the company’s ALH hotels division.
The transaction is similar to the one Wesfarmers carried out with Coles in late 2018.
