The expected outcome is that Franklins' store network will be sold down to a number of industry operators, with the majority going to independent operators. Full details of the managed sell-down are being finalised and are subject to clearance from the Australian Competition and Consumers Commission (ACCC). The sell-down process is expected to take six to nine months.
Ronald J. Floto, Group Chief Executive of Dairy Farm said, "The managed sell-down is the most effective solution - it addresses the complex regulatory requirements, ensures the maximum number of Franklins' stores remain open and competitive, and should provide continuity of employment for the majority of Franklins' 25,000 staff. The sell-down will allow us to concentrate capital and management attention on our other markets."
To support the divestment programme, Franklins and Metcash have entered into an agreement to establish a Joint Independent Divestment Alliance. This will manage the progressive sale of approximately 120 stores in New South Wales, Victoria, Queensland and South Australia to independent retailers. Franklins has substantially concluded discussions with Woolworths for the sale of approximately 80 stores in New South Wales, Victoria, Queensland and South Australia. The agreement reached with Metcash and the proposed agreement with Woolworths are conditional upon ACCC consideration of the likely effect on competition.
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Discussions concerning the remaining stores are in progress with several other established retailers and Franklins is presently in negotiation with Foodland with regard to selective acquisition of stores and associated distribution facilities in Queensland and New South Wales. A small number of under-performing stores may be closed over the next six months. Further details will be announced as binding agreements are concluded.
As stated in its year-end results announcement, the Group recognised an impairment charge of US$129 million in its 2000 accounts to write down the carrying value of Franklins' and associated assets. The carrying value of these assets will be reassessed when the Group releases half-year results as at 30th June 2001.
Dairy Farm is a leading food and drugstore retailer in the Asia-Pacific Region. At 31st December 2000, the Group and its associates operated over 2,200 outlets, principally supermarkets, hypermarkets, convenience stores and drugstores, employed some 79,000 people in nine territories and had sales of US$6.6 billion in 2000.
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For further information, please contact:
Dairy Farm Management Services Limited
Ron Floto (852) 2299 1881
Group Chief Executive
Ian Durant (852) 2299 1896
Group Finance Director Email : idurant@dairy-farm.com.hk
Golin/Harris Forrest
Bob Fienberg (852) 2501 7908
Email : bob.fienberg@golinharris.com.hk
This and other Group announcements can be accessed through the Internet at "www.dairyfarmgroup.com".