Demerger of Endeavour Group from Woolworths
Jarden acted as Advisor to Woolworths on the demerger of Endeavour Group.
Expertise
Structuring complex transactions and advising on corporate restructuring to optimise business operations and create long-term shareholder value.
Strategic Context
In 2021, Woolworths Group (ASX: WOW) successfully completed the A$13.3 billion demerger of Endeavour Group, following an internal reorganisation announced in 2019. The demerger created two separately listed entities: Woolworths and Endeavour. The strategic objectives of the demerger included:
- Simplifying operations, enabling each entity to focus on its core customer offerings.
- Optimising growth opportunities for both Woolworths and Endeavour through tailored strategy execution.
- Enhancing brand clarity, ensuring distinct market positioning for each business.
- Post-demerger, Woolworths returned A$2.0 billion to shareholders via an on-market buyback, strengthening its balance sheet and capital structure.
Execution
Jarden acted as advisor to Woolworths, assisting in the smooth separation of the two businesses. Key aspects of the strategy included:
- Negotiating Transitional Support Agreements (TSA) to facilitate Endeavour's transition into a standalone entity. These agreements covered:
- IT and business services, including personnel and procurement support.
- Strategic partnerships, ensuring synergies continued after the demerger.
- Structuring the transaction to allow Woolworths to return A$2.0 billion to shareholders.
- Securing agreements for the use of Woolworths’ online and international distribution channels, as well as lease cost-sharing arrangements, preserving cost efficiencies.
Outcome
The demerger successfully unlocked significant value for both Woolworths and Endeavour, creating more focused and agile operations for each company. Key outcomes included:
- Improved financial flexibility for Woolworths, strengthening its capital structure.
- Sustained strategic synergies through long-term agreements benefiting both entities.
- Jarden’s expertise in structuring complex transactions was pivotal in optimising Woolworths’ corporate structure, ensuring long-term value creation for shareholders.
