FoodWorks is planning to purchase 45 Coles stores, eight with adjoining liquor outlets, subject to approval by FoodWorks shareholders and the ACCC.
According to FoodWorks CEO Peter Noble, this development delivers the most significant growth in the company since its 2007 internal capital raising.
“This acquisition, valued at around $35 million, significantly contributes to achieving our growth strategies,” said Noble.
“Our focus over the last two years has been on new store development. These stores have a significant industry footprint and will allow the company to quickly and cost-effectively develop our ongoing Australian growth strategy,” he said.
According to Noble, the deal will benefit all stakeholders including the local communities serviced by these stores and FoodWorks shareholders, and will provide ongoing employment for existing store staff.
“This development is good for FoodWorks and its current shareholders and will also be good for customers and current store staff,” he said.
“We are very excited about the opportunity to purchase these stores and work with their existing staff and the local communities to improve and develop them. While the stores are not suited to the future Coles model they are perfectly suited to our business model.
“We anticipate that the existing store staff will transition over with the stores on their current terms and conditions and we are looking forward to welcoming them into the FoodWorks family.”
The stores included in the sale, which are in various locations throughout South Australia, Victoria, New South Wales and Queensland, are ideal in size and location to help accelerate FoodWorks’ growth strategy.
“We decided to purchase these stores as we believe that they have great potential to develop and generate excellent returns for our shareholders,” explained Noble.
“Our business model and ownership structure is unique in the supermarket industry in Australia. We are Australian owned and operated and our shareholder base is restricted to our retail store owners and their related parties. Our retailers are at the centre of small and medium business in Australia.”
Noble said that one of the key factors in the success of the integration will be tailoring the stores to suit their local customer base.
“Each of our new company owned stores, will, like our existing stores, be individually tailored to the local community it operates in,” he said.
The FoodWorks retail model allows the company to focus its attention on its customers and stores.
“As we outsource our supply chain and logistics to external providers, we have the flexibility to tailor the offering of our retailers’ stores to suit their local communities while still maintaining a profitable business. It means the shoppers who shop in these 45 stores and our other 403 branded stores can enjoy benefits of a large retailing brand and those of a dedicated local store that puts their unique needs first and foremost every single day,” he said.
FoodWorks offers shoppers a fresh, vibrant store fitout, a product range tailored to the needs of the local community, great value and outstanding, personalised, service.
“We are committed to ensuring that these stores provide the right mix of products for their local communities and the value they need to help stretch their shopping dollar further. We believe getting the mix right is about making sure that in every FoodWorks store we are stocking what customers want and if we don’t have it, doing whatever we can to source it.”
A sale and purchase agreement has been signed and FoodWorks is currently waiting on ACCC approval and the outcome of the FoodWorks shareholder vote to be held at an extraordinary general meeting on Monday 17 August.