The Woolworths Group Ltd (ASX: WOW) share price has started the week on a positive note following an update on its Endeavour group transformation.
In morning trade the conglomerate's shares are up 1% to $38.02.
What did Woolworths announce?
This morning Woolworths announced that the Federal Court has approved the dispatch of its restructure booklet.
This restructure is the first step of the Endeavour group transformation.
It will see an internal reorganisation through which assets and liabilities relating to the Woolworths Drinks Business, as well as its 75% ownership interest in ALH, are transferred into a distinct legal entity within Woolworths Group to create Endeavour Group.
After which, step two will see Woolworths seek to complete the ALH Merger.
Upon completion of the ALH Merger, Endeavour Group will be 85.4% owned by Woolworths and 14.6% owned by the Bruce Mathieson Group. The ALH Merger does not require shareholder approval.
However, what does require approval from shareholders is step three. This step will see the newly formed Endeavour Group separated from Woolworths Group by way of a demerger or other value accretive alternative.
Woolworths chairman, Gordon Cairns, explained: "In this new era of retail, the Restructure represents another step in the transformation of Woolworths Group. It will lead to the creation of Australia's largest integrated retail drinks and hospitality business. On behalf of the Board, I encourage shareholders to read the Restructure Booklet and vote in favour of the Restructure Scheme at the EGM."
Mr Cairns and the rest of the board unanimously recommend that shareholders vote in favour of the restructure scheme at the EGM on December 16.
The board also stressed that it will not result in a change in the number of Woolworths Group shares held by each shareholder, cause any income tax consequences for shareholders, or negatively impact the ability of Woolworths Group to pay dividends.
What it will do, is allow Woolworths and the future Endeavour Group to each focus on their core strengths while retaining a strong working partnership.
Given the early success of the Coles Group Ltd (ASX: COL) demerger from Wesfarmers Ltd (ASX: WES), I suspect that Woolworths shareholders will vote in favour of the scheme.
