Grocery and liquor wholesaler Metcash Ltd
(ASX:MTS) will inject an estimated $55 million of new capital into Mitre 10 to acquire a 50.1% stake in the hardware company.
Metcash says the amount of equity invested by the company is based on estimated earnings for the financial year to June 30 2010 and estimated net debt at completion and may be adjusted following finalization of Mitre 10’s audited accounts for the year to June 30 2010.
The company says it will have the right to acquire the remaining 49% of the equity in Mitre 10 following the finalization of the hardware company’s audited accounts in either 2012 or 2013.
Metcash CEO Andrew Reitzer says the company believes it can become the ‘champion of the independent hardware retailer’ and help them lift their revenue and profit through Metcash’s strong brand management, logistics and merchandising skills developed over many years.
Metcash has negotiated exclusivity arrangements with Mitre 10 including no talk no shop obligations, and Mitre 10 has agreed to pay a break fee of $500,000 to Metcash if Mitre 10 directors withdraw or adversely modify their support or shareholders do not approve the transaction.
Metcash reported net profit after tax of $202.5 million in fiscal 2009.
