In key news on Australian stocks, supermarket chain Woolworths (AU:WOW) announced that it would offload a 5% stake in liquor retailer Endeavour Group (AU:EDV) through a block trade at a price of AU$5.22 per share. The company plans to use the transaction proceeds of AU$468 million to return capital to its shareholders. Woolworths shares were modestly up while Endeavour shares declined 4.1% in reaction to the news.
More on Woolworths’ Stake Sale
Following the sale of the 5% stake, Woolworths would still own 4.1% of Endeavour. The company specified that it currently has no intention to sell the remaining stake and is committed to holding Endeavour shares for at least 60 days. That said, the company added that it would continue to assess its remaining stake in Endeavour and act in the best interests of Woolworths shareholders.
Woolworths’ CEO, Brad Banducci, stated that the two companies remain key business partners and have several long-term partnership agreements. However, the company doesn’t feel the need to own a material equity stake in Endeavour, with the latter nearing the completion of its third year as an independent listed company.
Woolworths spun off Endeavour, an alcohol retailer and hotel and poker machine operator, into a separate publicly traded company in 2021. The company believed that the move would help Endeavour expand further and boost shareholder value. Woolworths was under pressure to distance its supermarket business from the poker business to protect its reputation.
What is the Price Target for Woolworths Stock?
Woolworths stock has a Hold consensus rating based on three Buy, three Hold, and three Sell ratings. The average WOW share price target of AU$35.13 indicates an upside potential of about 10%.
