Woolworths, Metcash to Buy Foodland for A$3.1 Bln - 500 Beiträge pro Seite

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Woolworths, Metcash to Buy Foodland for A$3.1 Bln (Update7) Listen
May 25 (Bloomberg) -- Woolworths Ltd., Australia`s largest grocer, will become the biggest supermarket owner in New Zealand after teaming up with Metcash Trading Ltd. to buy Foodland Associated Ltd. for as much as A$3.1 billion ($2.4 billion).

Woolworths agreed to pay A$2.2 billion in cash and stock for 150 New Zealand supermarkets and 19 Australian stores. Sydney- based Metcash will buy Perth-based Foodland`s Australian wholesale unit and 60 supermarkets for as much as A$859 million in cash and shares, the companies said in statements today.

Chief Executive Roger Corbett`s first overseas acquisition takes Sydney-based Woolworths to a market where average sales are rising at twice the pace of its Australian stores. Metcash Chief Executive Andrew Reitzer will complete a national distribution arm and end a five-month standoff with Foodland.

``The assets will fare better in the hands of Woolworths,`` said Brian Bandsma, an analyst at Vontobel Asset Management in New York, which manages about $2.5 billion, including Woolworths shares. ``It will give them entrance in the New Zealand market.``

Foodland shareholders will get as much as A$26.17 a share, depending on whether they accept cash or stock, which is 3.6 percent more than the stock`s closing price May 20, before being suspended for the latest talks.

Foodland shares rose 40 cents, or 1.6 percent, to A$25.65 at the 4 p.m. close of trade in Sydney and have surged 34 percent since Metcash made its first offer Dec. 6. Woolworths shares fell 5 cents to A$15.57, trimming this year`s gain to 3.7 percent.

Foodland`s Debt

Woolworths will assume A$300 million of Foodland`s debt, valuing the total offer at A$3.4 billion. Woolworths` credit rating may be cut one level to BBB+, the third-lowest investment grade rating, said Standard & Poor`s, which cited the risks of the acquisition. Woolworths is also paying debt from the acquisition of Australian Leisure.

Woolworths and Coles Myer Ltd. control about half of Australia`s A$70 billion annual market for food, liquor and groceries, limiting opportunities for growth at home. Foodland`s New Zealand sales rose 11 percent in the fiscal third quarter, almost double the pace of Woolworths`s Australian food and liquor sales.

``For Woolworths, the deal seems like a perfect fit,`` said Robert Gregory, an analyst at London-based Planet Retail. ``With opportunities for expansion becoming increasingly limited in Australia, it has long talked about making a move abroad and where better than New Zealand.``

`Third Force`

Metcash shares climbed 20 cents, or 5.9 percent, to A$3.58. The stock has risen about a fifth since Reitzer`s opening bid, on optimism the enlarged company will be a more formidable competitor to Woolworths and Coles Myer.

The acquisition, which includes the biggest grocery wholesaler in Western Australia, will strengthen Metcash`s position as a ``third force`` in the Australian retailing market behind Woolworths and Coles, Reitzer said in an interview.

The stores he supplies will have about 18 percent of Australian market, up from 14 percent, with the greater buying power enabling him to reduce wholesale prices to his 5,200 customers, most of them family owned, as they battle the larger rivals.

Foodland had been looking for a buyer for its New Zealand unit since Metcash first bid for the Australian business and said it would spin off the New Zealand operations.

Foodland`s New Zealand stores compete with Foodstuffs, a group of three regional co-operatives owned by individual retailers, which combined have the largest share of the nation`s grocery market.

Woolworths Extends Lead

Buying Foodland New Zealand will boost Corbett`s annual grocery sales by 15 percent to more than A$28 billion, extending his lead over Coles Myer`s John Fletcher, who has annual supermarket revenue of A$22 billion.

``Foodland also provides an attractive platform for future growth opportunities in New Zealand including general merchandise and liquor,`` Corbett said in the statement.

The purchase would be the second in seven months for Woolworths`s Corbett, who last year beat Fletcher in a A$1.3 billion bidding war for Australian Leisure & Hospitality Group, cementing his company`s position as the nation`s biggest liquor retailer.

``Long-term this is a very good move for Woolworths, to expand in New Zealand and get new growth, and we don`t have any quibbles with the price they are paying,`` said Rob Patterson, who manages the equivalent of $1.6 billion at Argo Investments Ltd. in Adelaide, including 811,000 Foodland shares and 1.7 million of Woolworths.

Too Expensive

Argo is the 12th-largest shareholder in Foodland and 14th- largest for Woolworths, according to Thomson Financial.

Coles Myer`s Fletcher said he has no intention of bidding for any of Foodland assets. The company decided an acquisition would be too expensive and not in the best interest of shareholders, Melbourne-based Coles Myer said in a statement today.

Woolworths`s growth prospects in Australia are constrained by antitrust regulators. When Dairy Farm International Holdings sold its 287 Australian stores in 2001, the Australian Competition & Consumer Commission ordered that at least two- thirds be sold to independent owners. The ACCC allowed Woolworths to buy 67 supermarkets, half the number Corbett had sought.

Foodland shareholders will vote on the offer at a meeting in August.

More Acquisitions

UBS AG is advising Woolworths. Foodland is being advised by ABN Amro Holding NV. Deutsche Bank AG is advising Metcash.

UBS is the top adviser on mergers and acquisitions in Australia this year, working on 8 deals valued at $16.9 billion, according to Bloomberg data. Deutsche Bank ranks No.3 with six deals valued at $12.6 billion. ABN Amro doesn`t rank among the top 10, according to Bloomberg data.

Metcash`s Reitzer, who plans to sell the acquired supermarkets to his existing customers within the next 18 months, may also look at other purchases.

``Obviously more acquisitions are likely to be on the way,`` Reitzer said in the interview. ``We`re not in position to say -- but we have a strategic plan.``

Metcash`s net income fell 1.3 percent to A$54.8 million in the second half ended April 30, after the company lost an Australian supply contract with Pick`n Pay Stores Ltd., the nation`s fourth-ranked grocer.

``The enlarged size of the Australian operations will boost its buying power, create supply chain synergies and cost savings and help it compete with Coles and Woolworths,`` Planet Retail`s Gregory said.

Foodland`s Australian stores have struggled to compete on their own. Foodland`s Australian supermarkets increased sales 0.8 percent in the third quarter, compared with a 4.9 percent increase at Coles Myer and 6.1 percent by Woolworths.



To contact the reporter on this story:
Robert Fenner in Sydney [e-mail]
Last Updated: May 25, 2005 02:43 EDT

[Prognoserich]

Marginal im Plus konnten heute die australischen Dividendenvertreter an der Börse in Sydney den heutigen Handelstag behauptet in ihrem Leitindex S&P/ASX 200 beenden.



Das führende Börsenbarometer der Börse in Sydney notierte zum Handelsende mit 0,05 % im grünen Terrain auf einem Endstand von 4.093,20 Zählern.

Im Mittelpunkt des Handelsinteresses stand heute der Einzelhandelsriese Woolworths Australia mit einen stolzen Kursgewinn von 2,9 % auf 16,02 australische Dollar. Die Anleger honorierten hier den jüngsten Konsolodierungsdeal im australischen Lebensmittelsgeschäft. Die im Deal involvierte Metcash Trading (904821) konnte sich um 2 % und die ebenfalls beteiligte Foodland Associated (884275) immerhin noch um 1 % verbessern.

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sensationelle Kursentwicklung seit Mitte Mai!