Metcash will take full control of the Total Tools business, tipping in $101.5 million to snap up the 15 per cent of the hardware chain it does not already own by the end of the month.
Total Tools chief executive Paul Dumbrell will step down after more than five years in the top job. He plans to stick around until the end of April, before taking an extended break with his family, Metcash said.
Metcash will buy the 15 per cent of Total Tools it doesn’t own.
Total Tools is franchisor to the largest professional hardware chain in Australia. Metcash acquired its majority stake in 2020, and has delivered significant sales growth in the network, almost doubling turnover to $1.09 billion in 2023 from $585 million in the 2020 financial year. The store network expanded to 112 sites from 81, with plans to add around 10 stores a year.
Metcash’s Independent Hardware Group – which includes the Mitre 10 and Home Timber & Hardware brands – is Australia’s largest home improvement wholesaler, supplying more than 1500 stores.
Total Tools’ earnings are included within Metcash’s hardware division.
E&P analyst Phil Kimber said the purchase of Total Tools had been very successful for Metcash, and mopping up the rest of it only affected earnings modestly. “Given the challenges in forecasting the overall Total Tools business, we don’t expect [consensus earnings] to change,” he said in a note to clients.
Metcash has a mix of independently owned and majority-owned joint venture Total Tools stores. There are 44 JV stores that have put-and-call option arrangements over their remaining ownership.
Metcash is in talks with the majority of these JVs on resetting the deal, which would result in Metcash buying further equity and deferring the put option
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