The Australian Competition and Consumer Commission (ACCC) is inviting comments on a draft undertaking from Metcash which intends to resolve concerns regarding its proposed acquisition of Woolworth’s Home Timber and Hardware.
The ACCC said some home hardware retailers were worried about the impact the acquisition could have as Metcash already owns Mitre 10. Home Timber and Hardware and Mitre 10 are the only full-service wholesale options for independent hardware and home improvement retailers within Australia.
Roger Featherston, Commissioner of the ACCC, said without the alternative of switching their business to Home Timber and Hardware, many retailers are concerned that Mitre 10 would be able to stop them buying hardware supplies from outside Mitre 10.
“So Mitre 10 has offered to undertake not to restrict retailers from acquiring products from such sources,” Commissioner Featherston said.
The ACCC said if the acquisition went ahead, Mitre 10 would have an ownership interest in approximately 100 retail stores and that some retailers are stressed that it could discriminate against them in favour for its own stores.
“The proposed undertaking is also intended to prevent any such discrimination,” Featherston said.
Metcash’s undertaking can be read on the ACCC’s website and comments from any interested parties will be accepted until 12 July 2016. The ACCC says it will then decide whether to accept the undertaking, ask for amendments or reject it completely.
“Our seeking of views on the proposed undertaking, however, should not be interpreted as a signal that the ACCC will necessarily accept this or any amended undertaking on this matter,” Featherston said.
The ACCC said it expects to have made a decision by 21 July 2016. It was originally expected to make a decision on the matter by the end of June 2016.
Acquisition proposal follows Masters speculation
In January 2016, Woolworths announced its intentions to sell or shutdown all of it home improvement investments, which include Home Timber and Hardware and Masters. The decision was made with Masters losing more than AUD $600 million for Woolworths across its six years of operation.
Since the announcement, speculation has arisen that South African retail company, Steinhoff International, is interested in acquiring some Masters store sites.
The speculation has not however been confirmed with both Steinhoff International and Woolworths not commenting on the matter.
Bunnings and Brexit
At the same time Woolworths announced its intentions to sell or close its hardware stores, its competitor, Wesfarmers (owner of Coles supermarkets and Bunnings hardware stores) publicly stated it had acquired the UK’s Homebase home improvement chain for AUD $705 million.
Wesfarmers now hopes to turn all the Homebase stores into Bunnings branded sites.
The value of the acquisition has however since been questioned by a Bank of America Merrill Lynch analyst who wrote to clients saying Wesfarmers could benefit from not investing in growing the chain after Britain’s decision to leave the European Union (EU).In the note to clients, reported on by The Australian, the analyst said they believe Brexit could result in a UK recession. Wesfarmers did not comment on the analyst’s’ note.
