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Endeavour (ASX:EDV) shares on watch on Woolworths (ASX:WOW) selldown

The share price of Endeavour Group Ltd (ASX: EDV) is in focus today after a sell-down by former parent Woolworths Group Ltd (ASX: WOW).

Endeavour Group is the owner of a number of liquor businesses including Dan Murphy’s and BWS. It also has a large number of hotels, which include pokies machines.

Endeavour shares selldown

Woolworths announced that it had agreed to sell 5.5% of the issued capital of Endeavour Group through a block trade at an Endeavour share price of $6.46.

After this sale, Woolworths will still own 9.1% of Endeavour Group, and “has no current intention to undertake a further selldown in the short to medium term”.

The Woolworths Group CEO Brad Banducci said:

Our decision to reduce our stake comes after a successful transition from ownership to partnership with Endeavour Group. The proceeds will be used for strategic investments and general corporate purposes.

Should investors worry?

Firstly, it’s important to remember that Woolworths hasn’t sold its entire stake. It’s still keeping 9.1% of the business, so it’s selling less than half of its stake.

Woolworths Group “confirms that 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” shares.

The supermarket business pointed out that Endeavour Group “remains an important partner of Woolworths Group with a range of long-term partnership agreements in place.”

For example, Woolworths noted that partnerships include: the provision of supply chain solutions through Primary Connect, a joint food and liquor offer through co-located BWS stores and online, payment services provided by WPay, and BWS is a “key partner as part of Everyday Rewards.”

However, the Australian Financial Review reported that pokies reform with cashless gaming cards could “wipe out 35% of earnings from the Endeavour Group hotels business.” If that happens, perhaps it’s no surprise that Woolworths is looking to sell down shares.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
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