Wilson Asset Management

By Carrie LaFrenz and Simon Evans

Peter Hearl will resign as chairman of Endeavour Group amid broader boardroom changes following months of animosity between the alcohol retailer and hotels group and its largest shareholder, billionaire publican Bruce Mathieson.

The operator of the Dan Murphy’s and BWS brands told investors on Wednesday that Mr Hearl would be replaced by Ari Mervis, the former chief executive of Murray Goulburn. Mr Mervis became chairman of department store group Myer in November.

Mr Mathieson’s son, Bruce Mathieson jnr, will also step down from the board, and Peter Margin will join as a non-executive director. Both appointments are conditional on the businessmen passing probity checks and receiving regulatory approval. Mr Mathieson will nominate an alternative director for the Endeavour board later this year.

It is anticipated that Mr Mervis, who was previously the executive chairman of Accolade Wines, the country’s second-largest wine producer, will join Endeavour by the end of April. Mr Mathieson jnr’s resignation will take effect by June 30.

Mr Mathieson failed in an attempt late last year to appoint former Woolworths executive Bill Wavish to the Endeavour board at the company’s annual meeting in October. The publican, who controls some 15 per cent of the company, had also pushed for Mr Hearl to resign and criticised Endeavour’s performance – in particular its retailing strategy at Dan Murphy’s.

Mr Mathieson had previously said the purchase of wine companies and speciality wine businesses was also damaging overall returns. Endeavour owns several wineries, including Margaret River’s Cape Mentelle and McLaren Vale’s Shingleback.

“Hearl’s hobbies in the retail business have failed spectacularly, and it’s clear for all to see,” Mr Mathieson said in October, at the height of the dispute. “When I said get back to everyday low prices, I didn’t intend for Hearl to start with the share price.”

Mr Mathieson was also critical of what he claimed was poor management at Endeavour, with concerns that Dan Murphy’s stores were moving too far away from their origins as the operator of alcohol superstores, and into smaller, boutique shops.

Mr Hearl, who has been the chairman of Endeavour since it was spun out of Woolworths in 2021, told investors it was the appropriate time to step aside.

“As Endeavour moves into its next phase post-demerger and in line with orderly board succession and renewal planning, the board and I firmly believe now is the right time to commence a transition to a new chairman,” he said.

Mr Margin has worked in the food, beverage and dairy sectors for three decades, including as chief executive of Goodman Fielder and National Foods. He is currently a non-executive director of Costa Group and deputy chairman of Bega Cheese.

Endeavour shares gained 2.48 per cent on Wednesday to $5.37. The shares were sitting above $7 last February, but had slumped to as low as $4.77 by mid-November, slicing hundreds of millions of dollars off the value of Mr Mathieson’s stake.

John Ayoub, portfolio manager with Wilson Asset Management, said it was “nice to see some common sense prevail”. “The board now needs to focus on creating value for all shareholders,” Mr Ayoub said on Wednesday.

Since the failed vote to install Mr Wavish, there have been ongoing discussions between Endeavour’s major investors and the company about board composition. During negotiations, it was decided that if Mr Hearl was stepping down then so too would Mr Mathieson jnr. It was always expected Mr Hearl would step down, saving the company from an expensive and distracting extraordinary shareholders’ meeting.

“Once the theatre stopped, some of the major institutional investors were more vocal in their views,” said one source with knowledge of discussions.

Woolworths remains a major shareholder but declined to comment on the board shake-up. AustralianSuper is the other significant shareholder. The Australian Financial Review’s Street Talk column reported in November that AustralianSuper’s Shaun Manuell and Perpetual’s Vince Pezzullo teamed up, sounding out other institutional investors about possible candidates to replace Mr Hearl.

There remain questions, however, over the future of Endeavour’s chief executive, Steve Donohue, who has also been criticised by Mr Mathieson.

Mr Donohue faced investors in early December, when he outlined plans to boost earnings at the company’s pubs business by more than $150 million in the next five years through property investment, buying fewer pubs and cutting costs.