Woolworths is planning to spin off their drinks and pubs businesses, Endeavour Drinks, and ALH Group, after years of pressure to distance itself from the gaming business, Australian Financial Review reports.
ALH is one of Australia’s largest poker machine operators, which has come under scrutiny from authorities for breaching problem gambling laws.
Woolworths said it would combine the two businesses and sell them via a demerger, IPO or trade sale.
“The board believes that a merger of Endeavour Drinks and ALH followed by a separation, is in shareholders’ best interests and will benefit customers and team members of both groups,” said Woolworths chairman Gordon Cairns on Wednesday.
“The decision has been taken after consideration of the future prospects of both businesses and how they can be best realized,” he said.
The merged company will be known as the Endeavor Group as is expected to complete in the second half of 2019, subject to approvals.
Mr. Carins said the separation would also allow Endeavour Group to realize its full potential through business simplification and greater access to capital to pursue investment and growth.
The group will own around 1,500 liquor ships and 327 ALH hotels, which own around 12,000 poker machines.
Woolworths expects to retain a minority holding in a demerged Endeavour Group.