Supermarket Woolworths Limited has announced today (Wednesday) that it agreed with grocery wholesaler Metcash and its takeover target retailer Foodland to acquire Foodland's New Zealand business and 22 stores in Australia.

The businesses are to be demerged by Foodland. The 22 Australian Action stores (including 3 development sites) are in Western Australia, Queensland and New South Wales. The total value put on the enterprises to be acquired by Woolworths is approximately A$2.5bn. (US$1.9bn), Woolworths said in a statement.

Metcash has agreed to acquire the remainder of Foodland following the demerger, Woolworths said.

"For Woolworths, this transaction provides an exciting opportunity," said Roger Corbett, CEO of Woolworths. "It provides a significant opportunity in New Zealand within Woolworths' core area of business expertise. Woolworths believes that it will be able to leverage its retail experience and scale into New Zealand to enhance Foodland's customer offer, buying, merchandising, supply chain, information technology and store standards. Going forward, Foodland also provides an attractive platform for future growth opportunities in New Zealand including general merchandise and liquor."

"The 22 Action stores will be added to Woolworths' existing Australian store network and infrastructure," he said.