Metcash is acquiring the Franklins chain of 85 supermarkets, comprising 77 corporate stores plus supply to eight franchised stores.
The independent grocery and liquor wholesaler has entered into an agreement with Pick n Pay Retailers (Pick n Pay) of South Africa to acquire the shares of Interfrank Group Holdings, the company which owns the Franklins business, from Pick n Pay for $215 million.
Metcash will also implement a store sale program upon completion to sell the stores to independent IGA retailers. It will operate the stores in the intervening period whilst the store sale program is completed, which could take several months.
“The IGA network will significantly improve its competitive position against the national chains in Australia’s largest grocery market, NSW, while growing the market share of Metcash supplied retailers in the state from 11 per cent to 17 per cent,” said Metcash CEO Andrew Reitzer.
“Metcash expects the independent retailers who purchase the stores will lift each store’s performance through the successful combination of their own retailing expertise and through utilising the strength, services and support provided by Metcash, especially our national buying power, world class supply chain and marketing and merchandising programs.
“These stores will be able to take advantage of our favourable arrangements with suppliers to achieve more competitive pricing deals. Consumers and independent retailers in NSW are big winners from this deal,” he added.
The acquisition is expected to add more than $500 million per annum of wholesale sales to Metcash’s business. The transaction is subject to ACCC approval.