Wholesale distributor and retailer Metcash (ASX: MTS) hopes to expand its presence in the professional tool segment by entering into an agreement to acquire 70 per cent of Total Tools for $57 million.
If approved by the Australian Competition and Consumer Commission (ACCC), the deal would see Metcash hold a controlling interest in Total Tools Holdings, the franchisor of the largest tool retail network in Australia.
Total Tools has been operating for more than 30 years, and has 81 bannered retail stores targeting the professional tradesperson market.
In the 12 months to December 2019 Total Tools generated sales of approximately $555 million.
Once complete Metcash would add the Total Tools franchisor operations and one company owned store to its stable of retail brands including hardware retailer Mitre 10, IGA and liquor merchants Cellarbrations.
The deal includes a pathway for Metcash to acquire the remaining 30 per cent stake in Total Tools within the next four years by way of put and call arrangements.
"The acquisition of Total Tools enhances Metcash's position in the hardware market which will benefit independent retailers in both Total Tools and the Independent Hardware Group, and aligns with our purpose of "Championing Successful Independents", says Metcash Group CEO Jeff Adams.
Earlier this year Metcash completed a $300 million raise to pay off debt and secured $180 million of additional short-term committed debt facilities.
Adams says this raise gave the company the financial flexibility to complete acquisitions such as the one announced today.
Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support