Metcash makes play for Coles

Metcash has come forward as a potential new player in the bid for Coles Group, with chief executive Andrew Reitzer openly expressing interest in the supermarkets, should Coles decide to sell off the group in parts. Metcash is Australia's largest grocery wholesaler, supplying 2,500 independent IGA supermarkets. Its market share is increasing, thanks in part to the upheaval at Coles.

The company is the third force in Australia's grocery trade and while its name is largely unknown among shoppers, Metcash is expanding its presence through IGA supermarkets. Metcash reported normalised profit of A$174 million (€92.9 million), up 41% on last year. Reitzer expects competition to intensify if new owners take over at Coles and says the uncertain future is clouding his company's outlook.

Analysts, like Wilson HTM's Henry Edgar, do not think a change in ownership at Coles would significantly affect Metcash's profitability. "I don't think that the landscape will change so much by Coles changing and improving their efficiency that they'll have a massive impact on market share, and that's the key," he said. "If Coles simply cut costs, improved their business that way, market share may not follow."

The outcome of the Coles sale remains the great unknown in the industry but Reitzer says Metcash is ready to capitalise if the Coles auction drags on.

(Source: Australian Broadcasting Corporation)