Woolworths, Metcash Buying Foodland Assets

SYDNEY-Australia's Woolworths Ltd. and Metcash Trading Ltd. have agreed to buy the assets of supermarket owner Foodland Associated Ltd. for a combined price equivalent to US$2.76 billion. Woolworths has agreed to acquire Foodland's New Zealand supermarket business and 22 Action stores in Australia for A$2.5 billion (US$1.9 billion). Metcash has agreed to acquire Foodland's West Australian franchise and supply division and the rest of its Action Retail division for A$859 million (US$654.7 million).The Foodland Board has unanimously recommended the transactions. The transactions are expected to close in August.For Woolworths, the deal gives it a significant first foothold in the New Zealand retail market and cements its position as the biggest grocer at home in Australia. For Metcash, the transaction furthers its position as Australia's biggest grocery distributor and puts it on the map in the Australia retail market. Woolworths says it will provide Foodland shareholders with the option to receive a mix of cash and Woolworths shares subject to a total pool of Woolworths shares of approximately 81.6 million shares and a total cash pool of A$1.25 billion (US$952.7 million) less any Foodland net debt assumed by Woolworths. Metcash's acquisition also will be a cash and stock deal.