VENTURES: Pick n Pay Sells Franklins Australia
Recent Western Cape Business News
Pick n Pay Stores announced yesterday that it had sold its Australian retail operation, Franklins, to Metcash Trading Limited (Metcash), for A$215-million, or about R1.4-billion.
The Chairman of Pick n Pay, Mr Gareth Ackerman, said: “The decision to sell Franklins followed a strategic review which commenced several months ago. This review confirmed the excellent progress made by Franklins’ management team and staff in transforming the business.
“Since we bought Franklins in 2001, we have invested in the business and turned the loss making operation profitable, introduced franchising, developed a very successful loyalty programme and made other major structural changes which have significantly improved its performance.
“While we carefully considered all options during our strategic review, 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.
“The proceeds from the sale more than covers the book value of our investment. Importantly, the transaction also releases the capital invested in Franklins, enabling Pick n Pay to redeploy capital into higher yielding South and southern African operations.”
The acquisition is subject to informal clearance from the Australian Competition and Consumer Commission and other consents. Completion of the transaction is expected to occur by late September 2010.
As part of the transaction it has been agreed by both parties to withdraw all current litigation against each other.
“The recently retired MD, Aubrey Zelinsky, Acting MD and long standing FD, Roni Perlov, and the Franklins people have done an incredible job and they are deserving of both our praise and gratitude.”
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