Wholesale distribution company Metcash will take full ownership of franchise tool retail chain Total Tools by the end of November.
Metcash has an 85 per cent stake in the tools business. It will pay $101.5 million to acquire the remaining 15 per cent after the minority stakeholders exercised a put option.
Metcash acquired a majority ownership in 2020 and since then the business has almost doubled annual sales from $585 million to $1,085 million in FY23.
The Total Tools retail footprint has expanded from 81 to 112 stores. There are plans to add about 10 stores a year for the foreseeable future.
Majority-owned joint venture stores
Metcash’s growth strategy for the tool retailer mirrors its plan for the Independent Hardware Group: a mix of independently owned and Metcash majority-owned joint venture retail stores.
Forty four joint venture stores have put and call option arrangements in place for the remaining ownership of these stores.
Most of these joint venture partners have indicated interest in further reinvesting in their stores and/or opening new retail outlets.
Metcash reports the combined acquisition multiple is approximately five times EBITDA for 100 per cent of Total Tools Holdings, and the acquired joint venture or company-owned Total Tools stores.
Resetting the current put option arrangements will require Metcash to increase its equity interest in the joint venture stores and defer the residual ownership put option a further three to five years.
Total Tools CEO to exit
Total Tools CEO Paul Dumbrell announced he will step down from his leadership role by the end of April 2024.
Dumbrell has led the business since 2018 and steered the company through the Metcash acquisition.
Metcash Group CEO Doug Jones said “Paul has played a key role in the growth of Total Tools and in the smooth and seamless transition to Metcash ownership. He is leaving the Total Tools business in great shape with a successful winning strategy and a strong leadership team.”
Metcash is conducting an executive search of both internal and external candidates to take on the Total Tools CEO role.