Supermarket warehouse supply chain business Metcash Ltd has sold the remaining 12 of its former Action supermarkets in Western Australia for between $40 million and $45 million, the company has announced.
Food and liquor wholesaler Metcash Ltd has sold the remaining 12 of its former Action supermarkets in Western Australia for between $40 million and $45 million, the company has announced.
"The large format Supa IGA stores have been sold to a joint venture of existing independent IGA retailers and former executives of FAL, with Metcash to retain a minority stake," the company said in a statement.
Former Action general manager Rod McPhee is also understood to be involved in the deal.
The 12 bigger stores were included in the 82 outlets Metcash absorbed when it took over Foodland Associated Ltd's Australian wholesale and retail business in 2005 for $3.3 billion.
"The large format Supa IGA stores have been sold to a joint venture of existing independent IGA retailers and former executives of FAL, with Metcash to retain a minority stake," the company said in a statement.
Metcash said the divestment was subject to due diligence and expected to be completed by the end of this month.
"The proceeds will be within the previous forecasts by Metcash," the company said.
Metcash has already sold off Foodland's 45 outlets in New South Wales and Queensland - and 25 smaller outlets in Western Australia - to independent franchisees.
FW Holst retail analyst David Spry said Metcash had hung on to the 12 larger Western Australian stores for two years to make sure they went to an appropriate owner.
"It's more than just what a smaller independent can manage," Mr Spry said.
"You're looking at a huge amount of square metres inside. They had to find the right buyers and get the right people to run it because they're important stores."
The wholesaler supplies goods - as well as training and support - to the nationwide chain of IGA-branded stores.
In fiscal 2006-07, the number of IGA-branded stores increased to 1,256 from 1,209.
Metcash also operates Campbells Cash and Carry wholesale stores as well as the liquor wholesaler chain, Australian Liquor Marketers.
Metcash posted a strong 105.5 per cent increase in annual net profit to $166.8 million in the 2007 financial year.
In its latest guidance in August this year, it reported sales growth for the first quarter of fiscal 2008 in the seven per cent range.
Metcash shares rose two cents to $4.62 today.
The full text of a Metcash announcement is pasted below
National grocery and liquor wholesale distributor and marketer, Metcash Limited, today announced that the group has entered into an agreement to sell the remaining former Action supermarkets in Western Australia.
The stores - now branded Supa IGA - were acquired through the acquisition of Foodland's Australia businesses in 2005.
The large format Supa IGA stores have been sold to a joint venture of existing, independent IGA retailers and former executives of FAL, with Metcash to retain a minority stake.
The divestment, subject to due diligence, is expected to be completed by the end of October 2007 and the proceeds will be within the previous forecasts by Metcash.
The new joint venture is expected to drive the growth of Supa IGA stores across Western Australia, a state that has over 200 IGA retailers.
The divestment completes the successful integration of FAL's assets, making Metcash and IGA a strong third force in the Australian retail industry.
