Woolworths shareholders have voted overwhelmingly in favour of the first stage of plans to spin-off its liquor and hospitality businesses as Endeavour Group at an EGM on Monday afternoon.

More than 99.5 per cent of Woolies shareholders approved the first stage or “Restructure”, which will seek the approval of the Federal Court this week.

Through the internal reorganisation, Woolworths drinks business and its 75 per cent stake in ALH will be transferred into a distinct legal entity within the Group. After this restructure, the ALH merger will be completed, and Endeavour Group will be 85.4 per cent owned by Woolworths, with the remaining 14.6 per cent owned by Bruce Mathieson Group.

Then it is intended to separate Endeavour Group from Woolworths Group via a demerger or “other value accretive alternative”.

“By separating Endeavour Group from Woolworths Group, we believe both businesses will be able to focus on the changing customer needs and release the latent growth potential in both,” Cairns said.

“Both businesses will have strong leadership positions in their respective markets, with balance sheets to enable them to capitalise on their growth potential.”

EGM attendees, including members of the Alliance for Gambling Reform, praised Woolworths for distancing itself from the gambling and alcohol businesses. But Cairns stressed that the decision was not based on “getting out of pokies” and said that Woolworths’ “commitment to responsible gaming does not stop the day that we demerge”.

If the proposed separation of Endeavour Group takes place by way of a demerger, Woolworths will retain a stake in the region of about 15 per cent.

Cairns told shareholders that this is because Woolworths would intend to provide services to the new company under a partnership agreement.

Woolworths first flagged the demerger in July, saying the main driver is a more simplified structure and a greater focus on its core food and everyday needs markets.

Endeavour Drinks has been working on bolstering its portfolio in recent months, with the acquisition of leading McLaren Vale winery Chapel Hill from Swiss corporation Permafix, prompting the creation of a new wine division as part of Endeavour’s Pinnacle Drinks business.

Earlier this month, Woolworths named food and beverage industry veteran Peter Hearl as the proposed chairman-elect of Endeavour Group and Scott Davidson, former general manager of buying and merchandise at Countdown Supermarkets in New Zealand, will take up the position of managing director of BWS in January.

Woolworths CEO Brad Banducci said that while there has been accelerating innovation in the drinks business, such as an improved digital experience across the liquor businesses with Endeavour X, the financial performance of Endeavour Drinks in FY19 was below expectations.

The separation of Endeavour Group still remains uncertain and would be subject to another shareholder vote.

Cairns said the restructure and possible demerger will be a “extremely complex process” and expects it would not be completed until the end of the 2020 calendar year 2020.

The restructure is expected to be implemented in February 2020.

This story first appeared on sister site, Inside FMCG.