Woolworths has finally confirmed an agreement with Foodland and Metcash to acquire Foodland’s New Zealand business and 22 Action stores (including 3 development sites) in Western Australia, Queensland and New South Wales for a total enterprise value of approximately A$2.5 billion following a demerger of those businesses by Foodland. Metcash has agreed to acquire the remainder of Foodland following the demerger.
Roger Corbett, CEO of Woolworths, commented, “For Woolworths, this transaction provides an exciting opportunity. It provides a significant opportunity in New Zealand within Woolworths’ core area of business expertise. Woolworths believes that it will be able to leverage its retail experience and scale into New Zealand to enhance Foodland’s customer offer, buying, merchandising, supply chain, information technology and store standards. Going forward, Foodland also provides an attractive platform for future growth opportunities in New Zealand including general merchandise and liquor. The 22 Action stores will be added to Woolworths’ existing Australian store network and infrastructure.”
The deal puts the Sydney grocers firmly back in first place - at least in sales growth. This was one deal that didn’t see a bidding war between Coles and Woolworths, unlike last year’s ALH race.
Meanwhile, Corbett has also hinted that another NZ retailer, The Warehouse, could be next on his takeover list. He told the ABC’s Inside Business that the Foodland stores will act as a beachhead in New Zealand to enter the general merchandise market.
“The Warehouse is a very successful business in New Zealand and one that done well for a long time,” Corbett said. “We have made some assessment of (The Warehouse) already.”
He said Woolworths is also looking at the financial services and insurance sector as superannuation choice is ushered in.
“We have a very large superannuation fund inside Woolworths and we’re looking at the question of choice and how that can be accommodated,” Corbett said.
“In regards to financial services...we will develop that moving forward as opportunity determines but we are certainly interested in that space.”
The march continues: on the Nine Network’s Business Sunday, Corbett said he wished the federal government’s new industrial relations policies outlining a more flexible workforce could be initiated within the pharmacy sector. Woolworths has been lobbying for quite some time to run a trial pharmacy staffed by pharmacists within their supermarkets.
“What we are doing is protecting a small group of owners and the very profitable situations they are in,” Corbett said. “I hope there will be deregulation to a degree and I hope there will be a trial.” n