Metcash to buy Total Tools

Metcash, the supplier to thousands of independent supermarkets, will acquire national tools retailer Total Tools for $57 million.

Metcash supplies IGA, Mitre 10, Home Timber & Hardware and Cellarbrations bottle shops, all of which were beneficiaries of the coronavirus, with the company’s supermarkets division reporting underlying sales growth for the first time in eight years.

It no longer supplies Drakes supermarkets or 7 Eleven.

Metcash revealed it had also entered into the final stage of negotiations with retailer Total Tools to acquire 70 per cent of the business for $57 million. Total Tools operates 81 stores across the country and reported $555 million in revenue for the 2019 calendar year.

The acquisition, which is subject to regulatory approval, will look to further strengthen Metcash’s position in the hardware market. Metcash maintains an option to acquire the remaining 30 per cent of the business in the next three years.

Metcash’s said sales through the Covid-19 period had been very strong.

For the first seven weeks of the 2021 financial year, total food sales grew 9.3 per cent, reflecting a change in consumer behaviour, the company said. Hardware sales grew a similar 9.4 per cent, and liquor sales were up 5.5 per cent.

Chief executive Jeff Adams said the result was “very admirable” and the business had seen a material and permanent market share shift towards its brands.

“The success of our strategic initiatives together with a shift to more local neighbourhood shopping during COVID-19 has resulted in market share gains for the IGA network,” he said.

“Going forward, we are well-positioned with a strong balance sheet to help manage through the current uncertain environment while continuing to invest in growth opportunities.”

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