Archive | Metcash

Metcash to mop up Franklins

Published 2 July 2010

Metcash Trading Ltd, Australia’s largest independent grocery & liquor wholesaler, said yesterday it would acquire the Franklins chain of 85 supermarkets in New South Wales – 77 stores plus supply to 8 franchised stores from Pick n Pay Retailers (Pty) Ltd of South Africa.


Metcash entered into an agreement yesterday to acquire the shares of the Franklins business owner, Interfrank Group Holdings Pty Ltd, for $A215 million, to be paid on completion – expected by 30 September. Metcash will use existing bank facilities.


Metcash chief executive Andrew Reitzer said the company proposed to sell off the individual stores to independent retailers, the same way it operates the Metcash business. This would increase the market share of Metcash-supplied retailers in New South Wales from 11% to 17% and significantly improve the independent grocery network’s competitive position against the national chains.


He expected the acquisition to add more than $A500 million/year of wholesale sales to Metcash’s business.


Metcash said when it released its annual result on 1 June it increased wholesale sales for the year by 4.9% to $A11.5 billion, grew ebita by 8.6% to $A415.4 million, increased operating cashflow by 18.8% to $A294.7 million, increased profit after tax (before non-recurring item) by 8.5% to $A238.4 million and grew underlying earnings/share by 8.4% to A32c.


It March, Metcash acquired a 50.1% stake in the hardware wholesaler & marketer of the Mitre 10 hardware store brand in Australia, with the right to acquire the remaining 49.9% in 2012 or 2013.


Mr Reitzer said the wholesaler to the 440 independently owned Mitre 10 & True Value stores in Australia – separate from the Mitre 10 business in New Zealand – posted wholesale revenue of around $A850 million/year and had just completed a strategic & operational review of the business. He expected Mitre 10 to focus on improvements in the supply chain.


The Metcash business began in South Africa in 1968 and spread through Africa & internationally. It bought 72% of Davids Ltd in Australia in 1998, then sold its South African & African operations to management in 2004, retaining its stake in the Australian businesses, which traded as IGA Distribution, Campbell’s Cash & Carry and Australian Liquor Marketers.


Metcash grew in 2005 by buying the Australian operations of Foodland Associated Ltd. Woolworths Ltd of Australia bought the New Zealand operations, Progressive Enterprises Ltd.


The Franklins business Metcash is buying now is the remains of what was a much larger retail business owned by Dairy Farm International of Hong Kong. Metcash bought some of it in 2001.


Earlier stories:

26 March 2010: Mitre 10 NZ takes over brand names, appoints new chief executive, Blenheim mega store on market, group expansion under way

6 December 2004: Metcash proposes Foodland breakup with ASX listing for NZ business


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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Woolworths trading halted as Metcash lifts profit

Published: 24 May 2005

Metcash Ltd, the grocery & liquor wholesale distributor & marketer which is trying to take over Foodland Associated Ltd’s Australian business & hive off its New Zealand supermarket operations, said today the group increased net profit after tax by 11.3% to a record $A110.1 million (52-week adjusted).

As Metcash was making its announcement, Woolworth Ltd (Australia) sought a halt in trading of its shares amid speculation that it would take over Foodland’s Progressive Enterprises Ltd supermarkets business plus the New Zealand distribution business for $A2 million. Trading in Metcash & Foodland shares was halted on Monday.

The Metcash result to 30 April was before goodwill on consolidation of the newly acquired Metoz companies, the restructuring Metcash needed to go through before it opened its bid for Foodland.

Metcash chief executive Andrew Reitzer said cashflow from trading rose from $A171 million to $A183.6 million. After Metoz goodwill amortisation, profit after tax for the year was $A104.9 million.

The group’s largest division, IGA Distribution, grew ebit by 9.6% to $A141.6 million on same-store sales growth of 4%. IGA Distribution consolidated the network of Supa IGA & IGA stores throughout Australia, while 58 new stores were added to the IGA network, with 45 major store refurbishments & 23 store extensions.

Campbells Cash & Carry lifted its ebit 17.8% to $A17.3 million, but Australian Liquor Marketers’ ebit fell 14.6% to $A28.2 million, attributed to the loss of business with Australian Leisure & Hospitality and other chain-store acquisitions.

The liquor division’s new Independent Brands of Australia is consolidating more than 1200 independent liquor stores across Australia under 3 main brands, Cellarbrations, Cheers and Liquor Force.

Earlier stories:

23 May 2005: Metcash-FAL statement due

13 May 2005: Metcash & Foodland in talks, agreement expected

4 May 2005: Metcash lifts FAL scrip offer by 31%

2 March 2005: Suddenly FAL produces a demerger plan, while Grant Samuel finds Metcash undervalues its target

24 January 2005: Metcash puts $NZ2.17 billion midpoint enterprise value on FAL NZ

6 December 2004: Metcash proposes Foodland breakup with ASX listing for NZ business


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