SYDNEY - The Australian Competition and Consumer Commission (ACCC) said yesterday it would not oppose the bid by grocer Metcash Trading for Foodland Associated, valued at up to A$3.1 billion ($3.36 billion).
The proposed acquisition was unlikely to substantially lessen competition among supermarkets, since there was "only limited geographical overlap"
in areas where there was already strong competition from other rivals, the ACCC said.
"At the wholesale level there is virtually no overlap, as Metcash does not operate in Western Australia, the only state [Foodland] operates as a wholesaler and distributor servicing independent supermarkets," ACCC chairman Graeme Samuel said.
The antitrust watchdog said most competitors, suppliers and industry organisations contacted about the proposed takeover had "little or no concern about the acquisition, with some market participants of the view that it will heighten competition".
The cash or share offer was unveiled in December and would proceed through a takeover of Foodland as a whole and then spin off the New Zealand assets into a separate company, Metcash has said. Metcash wants Foodland's Australian business.
It would form a third grocery force in Australia behind Woolworths and Coles Myer. The bid has raised talk of a possible counterbid for Metcash by Foodland.
Woolworths has about 37 per cent of Australia's A$66 billion grocery and retail alcohol market with annual sales of A$24.5 billion. Coles Myer has about 32 per cent with sales of about A$21.3 billion. If the bid is successful, Metcash's market share share would rise nearly five percentage points to just under 28 per cent.
Metcash shareholders last week backed the bid and a A$1.1 billion restructuring to unlock the 60 per cent of its shares owned by South Africa's Metoz Holdings, enabling Metcash to expand its free float of shares in Australia to 100 per cent.
Shares in Metcash rose 1Ac to A$3.40. Foodland shares rose 34Ac to A$24.02.
- REUTERS
