Woolies’ pub float sees all eyes on ALE

WHILE reports were circulating yesterday of a potential $600 million float by Woolworths of its pubs, the more probable scenario is that the portfolio will be sold to the listed landlord ALE Group, according to some sources.

There was scuttlebutt in the market that the pub landlord’s managing director Andrew Wilkinson may have appointed Macquarie Capital as ALE’s adviser after he was spotted in the vicinity of the investment bank’s Martin Place offices in Sydney yesterday. Mr Wilkinson could not be reached for comment.

ALE Property Group is Australia’s largest listed freehold owner of pubs, all of which are leased for the long term to Australian Leisure and Hospitality Group.

ALH is 75 per cent owned by Woolworths and the remainder by pub baron Bruce Mathieson. The group also owns freehold pubs.

The supermarket giant and ALE have been in talks previously about a deal, but have not been able to reach agreement on price.

A statement yesterday issued by Woolworths confirmed it was looking at divestment options for the portfolio, including its property holdings in hotels and co-located liquor stores.

The options included single property sales, portfolio property sales and the creation of separate vehicles to own the assets, Woolworths said.

But any divestment would involve the relevant Woolworths group business retaining operational control of the properties through a leasehold interest in the relevant premises, it said in a statement.

Woolworths had previously indicated a sale of the properties had been on the cards.

Reports yesterday suggested only ALH’s freehold pubs would be included in the new entity, comprising about 100 properties, making it a similar size to the ALE Property Group.

Should the float happen, it will echo Woolworth’s spinoff of the SCA Property Group.

Source:  The Australian - 29th May 2014