Metcash boss on buying spree as ‘hedge’

Metcash chief executive Doug Jones has begun a companywide transformation of his wholesaler business that will see it lower its exposure to the supermarket sector just as the industry is facing public inquiries and political heat, to lift his exposure to food services, construction and hardware.

But Mr Jones said the decision to spend almost $600m on three acquisitions – Superior Food, Bianco Construction Supplies and Alpine Truss – was not related to the pressure on the supermarket sector but a “natural hedge” against shifting consumer demand.

Mr Jones said the deal to buy leading Australian food service distribution business Superior Foods for $412.3m was not about reacting to the supermarket inquiries, from the ACCC to a Senate price inquiry, but would help bolster its existing foods arm as well as benefit from the expected faster pace of growth in food distribution into venues and stores compared with lower growth for the supermarket sector.

“It is not driven by inquiries or what may come out of it,” Mr Jones said. “This makes our core grocery business stronger over time and we think it’s a reason to be excited for our customers, and it allows us to really deepen our differentiated value proposition.”

To help fund the acquisition spree, the deals will be funded via a fully underwritten institutional placement of $300m, existing cash and available debt facilities. A non-underwritten share purchase plan of up to $25m will be made available for eligible shareholders.

Metcash’s total group sales were up 0.9 per cent for the nine months to January 31.