Grocery retail giant Woolworths Ltd
(ASX:WOW) is to enter into the $24 billion hardware sector by making an offer for Australia’s second largest hardware distributor Danks Holdings.
Woolworths, in a joint venture equity agreement with leading U.S. home improvement retailer Lowe’s, has made an offer of $13.50 a share, valuing the company at $87.6 million, and will also pay a 53 cent dividend per share.
The Danks Board has unanimously recommended that its shareholders accept the offer.
Woolworths CEO Michael Luscombe says the existing home improvement sector in Australia is under-serviced and the company believes there is an opportunity to bring competition and grow the sector.
Mr Luscombe says there is a real opportunity to increase the overall size of the sector and this significant new distribution and retail investment should be positive for both customers and the industry alike.
Woolworths recorded net profit of $1.6 billion in 2008.
