Lending Association

Metcash halts trading amid Superior Food Group acquisition talks

Metcash (ASX:MTS) has requested the suspension of its shares until Monday, confirming Thursday morning media reports that it is exploring the acquisition of the food services operation, Superior Food Group.

In a Thursday morning statement, Metcash confirmed its discussions with the vendors regarding the potential acquisition. However, these discussions are incomplete, and there is no certainty of a transaction at this stage.

The trading halt is sought to prevent trading on a misinformed basis, pending an announcement related to the potential acquisition. Metcash has asked for the trading halt to remain until Monday, February 5, or until an announcement is made about the potential acquisition.

Trading was halted at Wednesday’s closing price of $3.64, following a positive January performance with a 4% price increase, compared to the ASX 200’s 0.7% rise.

No details regarding the potential price or the need for funds to finance the deal have been provided. Media reports suggest a possible cost of around $500 million, significantly higher than the $96 million in Metcash’s possession at the end of its first half on October 31.

If this estimate is accurate, Metcash could afford to make a substantial institutional placement, up to the 15% limit, without requiring shareholder approval. With a market capitalization of $3.56 billion at Wednesday’s close, the company could potentially raise approximately half a billion dollars, with its existing cash reserves serving as a buffer.

Notably, Woolworths acquired a controlling stake in PFD, the food services sector’s largest player, several years ago, prompting a rigorous inquiry by the ACCC.