Sydney - The Australian Competition Commission said it has opposed the local group Metcash Trading's planned takeover of supermarket chain Franklins, which is owned by Pick n Pay Stores [JSE:PIK]
The authorities said it would give Metcash a monopoly in grocery wholesaling to independent supermarkets in New South Wales state.
In July, Pick n Pay agreed to sell Franklins to Metcash for around R1.4bn.
Pick n Pay entered the Australian market via the acquisition of Franklins and Fresco stores in 2001. The decision to sell Franklins followed a strategic review which commenced several months ago, the group said.
The board felt that the Franklins business had not yet achieved critical mass and the decision was made to find an investment partner or purchaser for the business.
The unsolicited offer from Metcash at a "compelling" price, which reflects the greater strategic value of Franklins to Metcash than under Pick n Pay's ownership, was then received and accepted, it said at the time.
Franklins operates 77 corporate retail supermarkets in New South Wales, Australia, that sell food and general merchandise. They also supply eight independent franchisees trading as Franklins Family supermarkets.
The proceeds of the sale would have been used by Pick n Pay for various strategic business enhancement initiatives in southern Africa.