Mitre 10’s owner, Metcash, has agreed to buy retail giant Woolworth’s Home Timber & Hardware business for $165 million.
Metcash said on Wednesday it will fund the purchase with an $80 million institutional placement and another $85 million of debt from its current lenders, and expects to complete the deal in October.
The IGA supermarket supplier said the purchase of the hardware wholesaler and retailer will give it a combined network of about 1,800 stores generating about $2 billion in annual sales.
According to Metcash, the enlarged network will create an opportunity for synergies which are expected to benefit both retailers and shareholders.
It expects the acquisition to be earnings accretive by 2017/18.
“This increased scale, together with the opportunity to realise significant efficiencies, will enable us to be more competitive and deliver a better outcome for both our hardware retailers and their customers,” said Ian Morrice, Metcash chief executive.
“Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long term.”
Home Timber & Hardware is an integrated hardware wholesaler and retailer with over 1,200 stores in its network and strong retail brands including Home Timber & Hardware, Thrifty-Link, Hardings and Hudson Building Supplies.
The national store network comprises 43 company-owned stores, 363 bannered independent stores and an additional 865 unbannered stores. These are supported by four distribution centres: two in New South Wales, and one in both Victoria and Western Australia.
Under the terms of the agreement, Metcash will not acquire two loss-making stores or the Dandenong (Victoria) distribution centre, which is surplus to the requirements of the combined entity going forward.
The Australian Competition and Consumer Commission had raised concerns about Metcash taking control of Home Timber, Mitre 10’s only rival as a full-service wholesale option for independent hardware and home improvement retailers.
But the competition watchdog cleared the bid after Metcash promised to let independent stores buy products from other sources.
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