Ahead of its third-quarter sales update on Thursday, Woolworths (ASX:WOW) has sprung a surprise by revealing the sale of more than half of its retained holding in the grog, pubs, and pokies group, Endeavour, for $468 million. The proceeds will be used to fund a buyback later this year.
The retailer stated it would hang on to its remaining 4.1% stake in Endeavour for “at least 60 calendar days,” hinting that the sale of that holding could occur in July or August.
The 5% of Endeavour was sold at $5.22 a share in a block trade, a price that was a discount to the last sale on Tuesday of $5.36. Woolworths said it would update the market on the buyback at its 2023-24 full-year results in August.
Woolworths Group CEO, Brad Banducci, said in Wednesday’s statement to the ASX, “While Woolworths Group and Endeavour Group remain important business partners, with a number of long-term partnership agreements in place, we no longer believe that a material equity investment in Endeavour Group is required as Endeavour Group approaches its three-year anniversary as an independent listed company. As a result, we have decided to reduce our stake below 5% with the intention to use the proceeds to return capital to shareholders. We currently have no intention to sell the remaining stake but will continue to assess what we believe is in the best interests of Woolworths Group shareholders.”
Woolworths Group stated, “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 securities.”
The sale announcement raises questions about what Woolies will report in its trading update tomorrow. Coles Group yesterday reported a solid rise in group sales, with supermarkets leading the way with a 5.1% gain and just over 4% on a comparable store basis.