Woolworths Group Ltd (ASX: WOW) has completed its final move to exit its investment in Endeavour Group Ltd (ASX: EDV). The supermarket giant has sold its remaining 4.1% stake in Endeavour, a move that has drawn considerable attention in the market.
Details of the Divestment
This morning, Woolworths announced it had agreed to divest its remaining shares in Endeavour Group at $5.23 per share, generating a total of $383 million. The sale was executed through a block trade, marking the end of Woolworths' involvement in Endeavour since the latter’s spin-off in 2021.
Following the announcement, Endeavour's share price has experienced a slight dip of 2.0%, trading at $5.235. Over the past year, Endeavour’s shares have fallen by 14%, reflecting broader market challenges and specific operational issues.
Reasons Behind the Move
Woolworths has outlined that the proceeds from this divestment will be allocated towards acquiring the remaining 35% of PFD Food Services Pty Limited, a food service distributor. This strategic move is part of Woolworths’ broader growth and consolidation plans.
The decision to divest the stake in Endeavour was also influenced by recent financial performance and market conditions. Endeavour reported its full-year results on August 26, falling short of analysts' profit expectations. The company’s net profit after tax (NPAT) decreased by 3.2% year-on-year to $512 million, despite a 3.6% increase in sales to $12.3 billion. Endeavour maintained a fully franked dividend of 21.8 cents per share, consistent with the previous year.
The timing of the divestment may have been impacted by these results, as Endeavour’s share price dropped 6.9% following the announcement of its financial outcomes. This decline occurred just a week before Woolworths completed its sale, meaning the transaction was finalized at a slightly lower valuation than it could have been if executed earlier.
Endeavour's Future and Technological Transition
Management at Endeavour Group has been focusing on enhancing its technological infrastructure through its One Endeavour program, which aims to establish systems independent of Woolworths. This shift highlights Endeavour's commitment to strengthening its operational capabilities and preparing for future growth.
Woolworths Group Ltd’s exit from Endeavour marks a significant step in its strategic realignment, with a clear focus on expanding its presence in the food service sector while streamlining its investments in other areas.