The Mitre 10 and Home Timber & Hardware (HTH) chains will be combined into a $2 billion hardware giant, with Mitre 10 owner Metcash revealing on Wednesday that it will buy the Home chain from Woolworths for $165 million.
The Australian Competition and Consumer Commission cleared the way for the acquisition last month after it accepted an undertaking from Metcash in response to concerns from independent hardware retailers that an acquisition would affect their ability to purchase products from non-Metcash sources.
The sale, which will give Metcash a 900-store strong player in the hardware sector, is part of Woolworths’s decision to exit the hardware industry. Woolworths also plans to sell or close its Masters hardware chain.
In a statement to the Australian Securities Exchange, Metcash said it will fund the acquisition through a combination of approximately $80 million in equity and approximately $85 million in debt.
As part of the acquisition, Metcash plans to close the Home distribution centre in Dandenong, Victoria, along with two loss-making stores.
Home operates 43 company-owned stores and another 363 independent retailers operate under the Home brand. More than 800 unbranded hardware stores are supplied by HTH.
Mitre 10 is also a full-service wholesaler to hundreds of independent retailers in the hardware and home improvement sector and Metcash said combining the networks “will enable independent retailers from both groups to be more competitive as a result of the increased scale and efficiency opportunities”.
“Both Mitre 10 and HTH are passionate about supporting independent retailers,” said Metcash group chief executive Ian Morrice.
“The combination of the two businesses will mean that Metcash’s hardware business will have a turnover of approximately $2 billion. This increase 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.”
“The interests and values of Mitre 10 and HTH retailers are closely aligned. Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long term.”
Shares in both Metcash and Woolworths were placed in trading halts on Wednesday morning ahead of the announcement.
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