Review
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.
This review confirmed the excellent progress made by Franklins' management team and staff in transforming the business.
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.
The unsolicited offer from Metcash at a compelling price, which reflects the greater strategic value of Franklins to Metcash than under Pick n Pay's ownership, was then received and accepted, it said.
Franklins operates 77 corporate retail supermarkets in New South Wales, Australia, that sell food and general merchandise. They also supply eight independent franchisees trading as Franklins Family supermarkets.
Completion of the transaction is expected to occur by 30 September 2010, at which time Pick n Pay will sell 100% of the issued share capital to Metcash for AUS$215 million - or approximately R1.4 billion, subject to Metcash obtaining informal clearance from the Australian Competition and Consumer Commission (ACCC) and usual landlord consents.
As part of the transaction it is mutually agreed by Franklins and Metcash that they will withdraw all current litigation against each other.
The proceeds of the sale will be used by Pick n Pay for various strategic business enhancement initiatives in southern Africa.
Pick n Pay Chairman Gareth Ackerman said the decision to sell was a difficult one, especially as the management and staff of Franklins have put so much into building the business over the years.
He expressed gratitude to the recently retired MD, Aubrey Zelinsky, Acting MD and long standing FD, Roni Perlov, and the Franklins staff for their efforts and achievements.
The sale will enable Pick n Pay to concentrate its efforts in expanding in markets where it can leverage off its substantial South African base, he added.
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