Metcash Committing $560 million Investment to Bolster its Presence in the Food Services and Hardware Sectors

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The company aims to enhance its capabilities and expand its market share in these key areas. This strategic move is expected to position Metcash for growth and increased competitiveness in the dynamic landscape of food services and hardware industries.

Metcash’s recent acquisition of three businesses, totaling $560 million, is a strategic move designed to strengthen the company’s position in food distribution and hardware sectors, according to CEO Doug Jones. The businesses acquired include Superior Food Group, Bianco Construction Supplies, and Alpine Truss. Metcash plans to fund the acquisitions through a $300 million capital raising and up to $278 million from existing cash and debt. The move is viewed as a long-term strategy to enhance operations and competitiveness in key market segments.

CEO Doug Jones highlighted that the acquisition of Superior Food Group is a significant move for Metcash, instantly transforming its relatively small foodservice business into a nationally scaled operation. Jones emphasized the long-term growth prospects in the foodservice market, which is anticipated to outpace the grocery and supermarket sector. The acquisition strategically positions Metcash to benefit from evolving consumer habits, including increased out-of-home eating and demand for pre-prepared meals, providing a diverse range of opportunities for the company.

CEO Doug Jones emphasized that the acquisition strategy is not driven by indiscriminate growth or a shift away from the grocery sector. Superior Food Group, as the third-largest food distribution business in the country, serves diverse sectors, including aged care facilities, educational institutions, hotels, hospitals, mining sites, and popular fast-food chains like Domino’s, Hungry Jack’s, and Subway. This diversification aligns with Metcash’s commitment to strategic growth and expanding its presence in various markets.

Metcash views the acquisition as a means to facilitate its food suppliers in accessing additional markets while expanding Superior Food Group’s product offerings to its supermarkets. The company plans to leverage shared resources, including logistics, transport, and warehousing. The convergence of hospitality and supermarkets, particularly in the context of ready-made and takeaway meals, is noted by CEO Doug Jones. He emphasizes the quality of offerings in IGA stores, characterizing them as “healthier than those made in a factory.” This aligns with evolving consumer preferences for convenient and wholesome food options.