Australian supermarket giant Woolworths is set to combine its drinks and hospitality business with its hotel arm, ALH Group, into a single entity called Endeavour Group Limited – a new corporate giant controlling around 12,000 slot machines nation-wide.
The move follows recent pressure from investors to divest its liquor and gambling businesses, with Woolworths having been widely condemned as Australia’s third largest operator of slot machines – better known locally as poker machines – behind Crown Resorts and Star Entertainment Group.
The new entity, which will own 327 hotels and 1,500 retail alcohol stores, estimates annual sales of around AU$10 billion and EBITDA of AU$1 billion.
The separation is expected to take place in 2020.
“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 Group Chairman, Gordon Cairns.
“The decision has been taken after consideration of the future prospects of both businesses and how they can be best realized.”
The newly created entity is set to become one of Australia’s 50 biggest companies with similar annual revenue to national airline Qantas, according to experts.