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Firms scoop Metcash's bid for Mitre 10

Firms scoop Metcash's bid for Mitre 10

Middletons and Freehills have advised on grocery wholesaler Metcash's successful bid to enter the hardware market.

MIDDLETONS and Freehills have advised on grocery wholesaler Metcash’s successful bid to enter the hardware market.

Middletons advised Mitre 10 Australia on two schemes of arrangement, under which Metcash acquired 50.1 per cent of the combined Mitre 10 group for $55 million.

Metcash will have the right to buy the remaining 49.9 per cent of the company after the finalisation of Mitre 10’s audited accounts in either 2012 or 2013, to be based on an agreed multiple of earnings.

The capital injection was overwhelmingly endorsed by shareholders to strengthen Mitre 10's balance sheet.

Mitre 10 chief executive Mark Burrowes said of the move: "It is no secret that our competitive landscape has become a whole lot tougher in the last 12 months and this landmark deal will give Mitre 10 the firepower to successfully compete against two big box retailers.”

Middletons' partner Jol Rogers, who lead the deal, said: “The transaction was structured with some unusual features, whereby Metcash initially acquires a controlling stake then has a right to move to 100 per cent ownership after two or three years.

“The former Mitre 10 shareholders can call for a trade sale or IPO exit if Metcash does not move to 100 per cent control. The deal borrows features from the private equity space."

Freehills advised Metcash on the deal.

Burrowes said he is confident that the partnership with Metcash can deliver substantial gains for Mitre 10 when it brings its supply chain, marketing and merchandising expertise to the table.

"Metcash has significant experience in highly developed marketplaces and has been hugely successful against two larger players, so we view this arrangement as strategically important to our long term success", he said.

Middletons partner Rogers said the inter-conditional schemes of arrangement adopted by the two parties was "executed efficiently based on a clear understanding of what would ultimately benefit Mitre 10 and its shareholders in the long term”.

Rogers was assisted by Middletons' partner Andrew Mansour and lawyer Zoe Towell. Senior associate Stephen Hume assisted with the litigation aspects of the transaction.

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