South African supermarket group Pick ‘n’ Pay said its Franklins retail business, which it has sold to Metcash Trading, did not achieve “critical mass” in the Australian market.
The firm this morning (1 July) announced that it has sold 85 Franklins supermarkets, comprising 77 corporate stores and supply to eight franchised stores to Australian independent grocery wholesaler Metcash Trading for US$125m.
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Pick ‘n’ Pay entered the Australian market via the acquisition of Franklins and Fresco stores in 2001. The decision to sell the chain however, followed a strategic review, which commenced several months ago, the firm said.
“This review confirmed the excellent progress made by Franklins’ management team and staff in transforming the business,” the company said. “However, 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.”
Pick ‘n’ Pay said the unsolicited offer from Metcash was made at a “compelling price”, and that proceeds will be used for “various strategic business enhancement initiatives” in southern Africa.
Completion of the transaction is expected to occur by 30 September.
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