Total Tools’ $57m acquisition confirmed
Metcash has successfully acquired a 70 per cent stake in franchisor Total Tools Holdings for $57 million, a business that has boomed during the Covid-19 pandemic.
The wholesale distributor, which already has a number of hardware brands, will acquire the Total Tools franchisor operations, and two company-owned stores, with the structure of the acquisition leaving the door open to acquire the remaining 30 per cent stake by early 2024 through put and call arrangements.
Completion of the deal was announced on Tuesday, less than a fortnight after the ACCC gave its approval.
“We are delighted to have Total Tools, the largest independent tool network in Australia, join the Metcash Group,” chief executive Jeff Adams said in an update to the ASX.
“Total Tools is a complementary business to our Independent Hardware Group (IHG) and will present significant growth opportunities. We warmly welcome them to Metcash.”
Metcash is aiming to have a mix of independently owned and joint venture retail stores, as is the approach with IHG, and will provide a $35 million debt facility to fund Total Tools growth plans including gaining ownership interest in a number of stores.
Mark Laidlaw, the former CEO of Metcash’s hardware arm, will take on the role of chairman of the Total Tools Boards.
Adams said Laidlaw’s industry knowledge and experience will be “of great benefit” to Total Tools and the independent retailers.
Watchdog not worried
Metcash first announced plans to take over the Total Tools business in June, and entered a binding agreement a month later.
Metcash already operates in the hardware category through its Mitre 10 and Home Timber & Hardware retail brands, but when the ACCC investigated the proposed acquisition last month it found that it was unlikely to result in any vertical competition issues of concern.
“We saw that generally Mitre 10 focuses on the DIY customer and those looking for convenience, while Total Tools mainly attracts trade customers because of their extensive range of trade quality products and specialised staff,” said ACCC Chair Rod Sims.
“We have seen a lot of activity in the tool industry this year. Bunnings is the clear market leader, and with IHG increasing its footprint, any further consolidation of the tool market at a national, state or local level will be scrutinised closely.”