Metcash Hammers Down Total Tools Buy Despite ACCC Clouds




Supermarket and hardware supplier and retailer, Metcash has signed a binding agreement to acquire 70% of Total Tools Holdings Pty Limited (Total Tools), for $57 million.

The deal was first revealed by Metcash in its June profit results 2020.

The deal remains subject to approval by the ACCC which has expressed reservations about the transaction and asked for market reaction.

Control of Total Tools will mesh with Metcash’s control of Mitre 10, the country’s second-biggest hardware chain.

Metcash says Total Tools is the franchisor to the largest tool retail network in Australia with 81 bannered retail stores nationwide. It has been operating for over 30 years and targets professional tradespeople who require high-quality tools for commercial use. The retail store network generated sales of $555 million in calendar 2019.

Through the acquisition, Metcash will acquire the Total Tools franchisor operations and one company-owned store.

"Consistent with the successful approach in the Hardware pillar, Metcash would look, over time, to have a mix of independently owned and joint venture retail stores. Metcash will provide Total Tools with a $35m debt facility to support its growth plans and the future acquisition of an ownership interest in a select number of stores.

"The acquisition structure includes a clear pathway for Metcash to acquire the remaining 30% stake in Total Tools within the next 4 years by way of put and call arrangements.

Metcash Group CEO, Jeff Adams, said in a statement to the ASX yesterday: “We are delighted to have Total Tools join the Metcash Group. 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”.

“The acquisition is being funded out of existing cash reserves. The equity raising in April strengthened our balance sheet and provided us with the flexibility to execute on strategic acquisitions such as Total Tools”, Mr. Adams said.

Metcash shares were unchanged at $2.75.