New hope for PnP deal in Australia
Reuters, Sapa and I-Net Bridge
Johannesburg - The Australian grocery wholesaler Metcash has extended the cut-off date for its takeover of Franklins, owned by Pick n Pay Stores [JSE:PIK].
Metcash announced that it planned to proceed with the R1.4bn deal despite opposition from the Australian competition regulator. The deal's cut-off date has been extended to June 30 2011, Pick n Pay said on Tuesday.
Metcash has notified the Australian Competition and Consumer Commission (ACCC) that, in no fewer than five business days from Tuesday, it intends to take further steps to proceed with the proposed transaction.
The ACCC announced earlier this month that it would oppose the proposed sale.
The authority said it would give Metcash a monopoly in grocery wholesaling to independent supermarkets in New South Wales state.
"Our firm view is that the sale of Franklins to Metcash does not substantially lessen competition," Pick n Pay spokesperson Tamra Veley said on Tuesday.
"We continue to believe it would strengthen, not weaken, the independent sector, allowing independents to better compete against the dominant position of Coles and Woolworths," she told Sapa.
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.