Metcash will inject an estimated $55 million of new capital into the Mitre 10 Group in return for a 50.1 per cent stake in the Mitre 10 Group.
The amount of equity invested by Metcash is based on estimated earnings for the financial year ending 30 June 2010 and estimated net debt at completion and may be adjusted following finalisation of Mitre 10’s audited accounts for the year ending 30 June 2010. The adjusted amount payable by Metcash will be based on actual 2010 earnings and actual net debt at completion.
Metcash will have the right to acquire the remaining 49.9 per cent of the equity in the Mitre 10 Group following the finalisation of Mitre 10’s audited accounts in either 2012 or 2013, based on an agreed multiple of earnings.
“We are delighted to have been selected as the preferred partner for Mitre 10, and believe we can add significant value to Mitre 10’s customers in an increasingly competitive marketplace,” said Metcash CEO Andrew Reitzer.
“Our discussions with Mitre 10’s customers in recent weeks have confirmed that independent hardware operators strongly support an experienced, well capitalised wholesaler such as Metcash, being chosen as the long-term partner for Mitre 10.
“We can become the ‘champion of the independent hardware retailer’ and help them lift their revenue and profit through Metcash’s strong brand management, logistics and merchandising skills developed over many years,” added Reitzer.
The transaction is expected to be completed late March 2010.