Freehills has advised Metcash in connection with its acquisition of a controlling stake of 50.1% in the Mitre 10 Group in return for an estimated $55 million of new equity capital into the Mitre 10 Group.
The Mitre 10 Group had been searching for external equity from a strong strategic alliance partner to better position itself against increased industry competition from Bunnings (owned by Wesfarmers) and the newly formed Woolworths/Lowe’s joint venture (which had recently acquired the hardware supplier Danks).
Metcash saw many similarities between the Australian hardware sector today and the grocery market in the late 1990’s when independent grocery retailers were losing market share and struggling to compete with Woolworths and Coles.
The transaction was undertaken through an inter-conditional schemes of arrangement involving the independent unlisted public companies Mitre 10 Australia Limited and Mitre 10 Limited and featured a novel structure which has given Metcash the right to move to 100% ownership in either 2012 or 2013 for a price based on an earnings multiple less net debt at the relevant time.
The Freehills team was led by M&A partner Martin Shakinovsky with senior associates Andrew Rich and Emma Rudd. The Freehills team worked very closely with Metcash’s legal team which is led by general counsel Greg Watson.
‘This transaction adds a significant fourth pillar to Metcash’s already impressive business,’ Shakinovsky said. ‘Metcash has been reviewing a number of strategic growth opportunities over the past few years which would enable it to leverage off its skills and experience in brand management, logistics and merchandising in complementary industries—the hardware industry and the acquisition of control of Mitre 10 would seem a logical fit.’
Mitre 10 Australia Limited was advised by Middletons and Mitre 10 Limited was advised by DSM Legal.
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