FoodWorks buys Coles in bulk for $35 million

QUEENSLAND consumers are set to benefit following an approval by the Australian Competition and Consumer Commission (ACCC) for FoodWorks to acquire 45 Coles supermarkets.

FoodWorks will now have around 750 member stores across Australia, in many cases competing directly with major supermarket chains.

Estimates from the ACCC’s grocery inquiry suggest that the number of stores by the different supermarket chains in Australia is around: Woolworths 780, Coles 750, Aldi 170+, Franklins 80 and various independents 2800.

Aldi hopes to increase the number of stores in Australia to more than 700 over the next few years. Rival bulk buyer Costco will soon open its first major Australian store in Melbourne.

Although prolonged drought has influenced food prices in Australia, open competition is sustaining downward pressure on grocery prices.

The Federal Government has already moved to relax the foreign investment rules regarding the entry into Australia of foreign supermarket operators such as Aldi and Costco.

FoodWorks CEO Peter Noble, says the company’s intention to buy 45 Coles stores, eight with adjoining liquor outlets, 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,” he says.

“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.”

According to Noble, the deal will benefit all stakeholders including the local communities serviced by the stores and FoodWorks shareholders.