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Date : 24/06/2021

Endeavour Group set to begin its Journey On ASX with $12B Market Capitalization

Woolworth’s Endeavour Drinks segment procures and resells drinks to customers in Australia. It operates 1,610 stores under Dan Murphy’s and BWS brands, as well as Cellarmasters and Langton’s online platforms.

Why did Woolworths Group announce the Demerger with Endeavour Group?

This morning, Endeavour Drinks (ASX: EDV) debuted in the ASX following the demerger from parent company Woolworth. Woolies still owns over 14% in Endeavour, however, the spin off will give EDV a chance to not be bogged down by the structural headwinds in supermarket business and continue growing. Afterall, EDV has been the fastest growing and the most profitable segment at Woolworth. EDV will now also focus on building its hotel business by expanding their footprint and by the addition of new pokies machines.

Given the importance of Endeavour drinks to Woolworth’s income and growth, WOW shares have taken a massive hit following the demerger. At the time of writing this, WOW shares are down 11% today and currently trading at $37.80 a share. In the grand scheme of things however, the spin-off is a win-win as Woolworths can now be rid of the ESG issues surrounding the alcohol and gaming businesses. Both businesses were held back until now, and they can now finally concentrate on their respective niches and focus on growth.

For investors, this is extremely good news as WOW is now primarily a supermarket and will be affected by the tailwinds and headwinds in the segment. Endeavour’s recent growth rates and profitability will be an attraction for investors chasing growth in the medium to long-term.

EDV shares have begun trading on the ASX today at a stock price of over $6 and a market cap of around $12 billion.

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