Woolworths Ltd. Salvages $380 Million in Home Improvements ExitBy
Australian supermarket chain announces three-part sale
Joint venture with Lowe’s cost Woolworths billions of dollars
Woolworths Ltd. expects to salvage A$500 million ($380 million) exiting its home-improvements venture after a failed attempt to take on Australian market leader Bunnings Ltd. cost shareholders billions of dollars.
The Sydney-based supermarket chain announced three separate contracts late Wednesday to quit the unprofitable business. The exit process started in January, when Woolworths and partner Lowe’s Cos. gave up on the venture after more than six years.
Metcash Ltd., the owner of the Mitre 10 hardware chain in Australia, agreed to buy Woolworths’ Home Timber & Hardware Group for A$165 million, Woolworths said in a statement. Meanwhile at the Masters hardware chain, an underwritten sale of inventory overseen by a unit of B. Riley Financial Inc. will deliver gross proceeds of $500 million, Woolworths said.
Finally, a consortium including Aurrum Group, Spotlight Group and Chemist
Warehouse proposes to buy 82 Masters properties and development sites and turn them into large-scale retail centers, Woolworths said. It didn’t put a value on the sale.
While the three agreements will gross A$1.5 billion, net proceeds will be A$500 million after wind-down costs, Woolworths said. Woolworths in February booked a A$3 billion charge to write down the assets and exit stores as it reported its first loss since listing in 1993.
“These agreements are the result of an intensive seven-month process of reviewing all possible options for exit and extensive negotiations,” Woolworths Chief Executive Officer Brad Banducci said in the statement. “This decision means management can focus on driving the momentum in our core businesses.”
Woolworths said it exercised on Wednesday its right to end the agreement with Lowe’s after a dispute about how to value the U.S. partner’s 33 percent stake.