Metcash Limited announces major acquisitions in foodservice and hardware, set to boost growth trajectory

Metcash Limited (MTS:ASX), an Australian powerhouse in wholesale and distribution, announced a significant strategic move with the acquisition of three businesses, signaling a robust expansion and diversification strategy that is poised to redefine its market trajectory. The acquisitions include Superior Food, a leading player in the Australian foodservice distribution sector, with a deal value of up to A$412.3 million, marking a significant leap in Metcash’s food strategy. This move not only extends Metcash’s leadership as the top wholesaler and distributor to independent businesses across Australia but also underscores its commitment to capturing the growing foodservice market.

The acquisition of Bianco Construction Supplies and Alpine Truss for $82.2 million and $64.0 million, respectively, complements Metcash’s hardware and industrial supply division, aligning with the Independent Hardware Group’s (IHG) strategy for a comprehensive ‘Whole of House’ offering and network expansion. These acquisitions, supported by compelling expected annualized synergies of approximately $19 million, are anticipated to be mid-single-digit earnings per share (EPS) accretive on a pro-forma Oct-23 last twelve months (LTM) basis, including synergies, and also expected to contribute positively to Metcash’s margins.

Funded through a fully underwritten institutional placement of $300 million, existing cash, and available debt facilities, along with a non-underwritten Share Purchase Plan of up to $25 million for eligible shareholders, these acquisitions reflect Metcash’s disciplined approach to capital allocation and growth.

Metcash Group CEO, Doug Jones, highlighted the strategic and synergistic value of these acquisitions, stating, “We are delighted to announce three strategically aligned, synergistic and financially compelling acquisitions that accelerate our growth strategy. The acquisitions unlock substantial shareholder value and build on our track record of disciplined and accretive capital allocation. They also deliver further diversification and resilience to the Group and provide Metcash with an even stronger growth trajectory.”

The addition of Superior Food is particularly noteworthy, given its established market leadership and potential for future growth within the attractive foodservice sector. Metcash’s proven integration track record and food distribution expertise are expected to unlock significant value from this acquisition, enhancing its overall proposition to champion successful independents and support thriving local communities.

Craig Phillips, founder and CEO of Superior Food, expressed enthusiasm for the acquisition, noting the strong alignment with Metcash’s capabilities and focus on supporting independents, which positions the company for continued growth under Metcash’s stewardship.

In summary, Metcash Limited’s strategic acquisitions of Superior Food, Bianco Construction Supplies, and Alpine Truss mark a significant milestone in the company’s growth and diversification strategy. This move not only reinforces Metcash’s position in the Australian market but also sets the stage for enhanced shareholder value and a stronger growth trajectory, underpinned by a commitment to championing successful independents and thriving local communities.

Metcash Limited’s strategic acquisitions underscore a well-considered approach to growth and diversification. By integrating these businesses, Metcash not only strengthens its market position across both food and hardware sectors but also leverages synergies to drive shareholder value. This move is indicative of Metcash’s adaptive strategy in navigating the complexities of the Australian market, ensuring resilience and setting a precedent for future growth initiatives.