Woolworths wants to relinquish control of its controversial pubs and poker machines business through a plan to merge it with its bottle shop operations and spin that off as a new company.

Australia's largest retail group said on Wednesday it planned to combine its bottle shop and pubs businesses, Endeavour Drinks and ALH Group, with the intention to sell, demerge or float it through an IPO in calendar 2020.

Woolworths says it planned to combine its drinks and hospitality business, Endeavour Drinks and ALH Group, with the idea to eventually demerge it. Credit:Virginia Star

Woolworths said it expected to retain minority ownership of the new business, to be called the Endeavour Group.

The supermarket chain has come under constant pressure from anti-gambling campaigners over its 75 per cent stake in ALH, which is Australia's largest operator of poker machines with more than 12,000 across its 323 pubs and clubs.