Metcash Limited (Independent Hardware Group) has entered the final stage of negotiations to acquire 70% of Total Tools Holdings (TTH) with an option to acquire the remaining stake at a later date.
TTH is the franchisor to the largest professional tool retail networks in Australia with 81 Total Tools-branded stores nationwide, generating ~$555m in sales annually. TTH operates in the commercial trade market, partnering with leading local and global brands of tools, accessories, consumables and specialist equipment, true to its motto “Every Tool, Every Trade”. TTH has been operating for over 30 years servicing the professional trades market.
The proposed acquisition will include the TTH franchisor operations and a company owned store in Moorabbin, Victoria. Consistent with IHG’s successful network strategy today, Metcash would intend, over time, to adopt a mix of store ownership within TTH, including both independently owned and joint venture stores.
Metcash believe the rationale for acquiring Total Tools is compelling as it:
- Aligns with Metcash’s strategy to be the leading supplier to independents in each of its three pillars – Food, Liquor and Hardware
- Enhances Metcash’s position in the Australian hardware market which will benefit independent retailers in both Total Tools and the Independent Hardware Group
- Increases Metcash’s exposure to trade customers
- Supports Total Tools’ vision to remain a leading professional tool retail network
- Strengthens both Metcash’s and Total Tools’ existing independent networks
- Result in significant value creation opportunities and synergies
It is important to note that the transaction is subject to approval by the ACCC. Metcash can give no assurances at this stage as to whether the discussions will lead to a binding transaction.
The interests and values of IHG and TTH are closely aligned. Metcash believe a successful transaction will enable the combined group to be stronger, more efficient, more competitive and better able to serve both businesses customers and communities. Metcash’s objective remains to Build Successful Independents and to grow a vibrant independent hardware sector for the long term.
You can view the ASX announcement HERE