Wholesale distribution and marketing company, Metcash (ASX:MTS) has penned a binding agreement to acquire a 70 per cent interest in Total Tools Holdings for ~$57 million.
Total Tools is the franchisor to the largest commercial tool retail network in Australia with 81 bannered retail stores nationwide.
The retail store network generated sales of ~$555 million for the 12 months ended 31 December 2019.
Over time Metcash aims to have a mix of independently owned and joint venture retail stores within the network and will provide Total Tools with a $35 million debt facility to support its growth plans and the future acquisition of an ownership interest in a select number of stores.
The acquisition is subject to approval by the Australian Competition and Consumer Commission and if approved, the acquisition structure includes a clear pathway for Metcash to acquire the remaining 30 per cent stake in Total Tools within the next 4 years by way of put and call arrangements.
Shares in Metcash (ASX:MTS) are trading 0.36 per cent higher at $2.76.