Franklins’ parent company Pick n Pay has announced that it has an alternative exit strategy in place if the Australian Competition and Consumer Commission (ACCC) do not approve its sale to Metcash.
According to Pick n Pay chairman Gareth Ackerman, the alternative for the company will be to sell the Franklins stores and other strategic assets individually or in groups via a tender process.
“Following the strategic review announced earlier this year, Pick n Pay took a decision to exit the Australian market. Our preferred option to achieve this is through the sale of Franklins to Metcash. While our first priority is to complete the sale to Metcash, we considered it prudent to put in place an alternative exit strategy in the event the ACCC does not approve the sale to Metcash,” he said.
"The decision to sell Franklins was not taken lightly. Without the benefits of scale in the market and in the face of unprecedented discounting by Woolworths and Coles, we consider it essential to start this process immediately as any further delay in selling the business would not be in the best interests of our shareholders, Franklins employees, suppliers and other interested groups.”
Metcash said it is not surprised about Pick ‘n Pay’s strategic plans.
“It is consistent with what we always understood to be Pick n Pay’s only other course of action if the ACCC refuses informal merger clearance for Metcash’s proposed acquisition of Franklins,” Metcash said in a statement.
“Such a development would be regrettable and result in an increased concentration of retail market power for Coles and Woolworths, because other than for Metcash/IGA, it is difficult to envisage who could be successful bidders for stores in such a tender process.
“We, however, remain confident that we will be able to address all of the ACCC’s competition concerns in respect of the acquisition and obtain clearance.”
The ACCC last month released its Statement of Issues asking for more comments on the proposed sale of Franklins to Metcash. A final decision from the consumer watchdog is expected to be made on 11 November 2010.