AUSTRALIA: While analysts debate sale of Franklins, store officials deny it's even in the pipeline

AUSTRALIA: While analysts debate sale of Franklins, store officials deny it’s even in the pipeline

Some analysts believe that Dairy Farm can still make some money out of its loss-making supermarket chain Franklins . Speculation has been rife for weeks that the Hong Kong-based conglomerate parent of Australia's third largest supermarket chain is mulling a sale after the company posted losses of A$450m.

February 20, 2001

Some analysts believe that Dairy Farm can still make some money out of its loss-making supermarket chain Franklins. Speculation has been rife for weeks that the Hong Kong-based conglomerate parent of Australia’s third largest supermarket chain is mulling a sale after the company posted losses of A$450m.

Jeremy Suich, of ABN-Amro, commented: “I would be happy if they got A$500m.” A price that could wipe out current debts and provide a handy net asset value of A$50m.

Others are not so optimistic however, focusing on the potential problems that might be caused by the Australian Consumer and Competition Commission (ACCC). If the consumer watchdog refuses to let the Franklins chain go to one major player, particularly the industry leaders Woolworths or Coles Myer, a break-up could force the final price considerably lower.

At the troubled supermarket chain however, officials are remaining tight-lipped about their future. Responding to the recent comments of former CEO Paul Simons, who indicated that a sale was imminent, a spokesman said: “Paul is entitled to his opinion but like most people, he is not always right. It nothing but speculation. No decision has been made.”