Strategic rationale for the acquisitions
A. Acquisition & Purchase Price Details (cont'd)
Acquisition of 100% of the shares in Bianco Construction Supplies Pty Limited ("Bianco") by way of the acquisition of 40%¹ of the shares in Bianco and 100% of the shares in
Bianco Hardware Pty Limited.
The purchase price includes:
1. At the Enterprise Value (EV)2 level:
Bianco
2.
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A fixed upfront EV of $82.2m, payable at completion³
Plus a potential incremental Management Earn-Out4 payment of up to $6m (Maximum). The earn-out is payable in 1Q FY28 based on the combined earnings of Bianco
and Metcash's existing K&B business in FY2027, normalised and adjusted for certain factors.
Plus/minus certain other customary purchase price adjustments, including:
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Plus an amount of ~$8.7m equating to Bianco's expected completion cash position (including a working capital adjustment), payable to all shareholders at completion
Minus a fixed amount of $4.0m, which will instead be paid by Metcash into escrow at completion and then applied in relation to certain warranties and indemnities (if
any)
The share purchase agreement includes certain conditions precedent, including in relation to ACCC clearance. Subject to ACCC, completion is expected to occur in the fourth
quarter of FY24.
Acquisition of the business and assets of Alpine Truss Pty Ltd ("Alpine Truss").
The purchase price includes:
1.
A fixed upfront EV² of $64.0m, payable at completion³
Alpine Truss
2.
Plus/minus certain other customary purchase price adjustments, including:
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Plus a working capital adjustment payable in relation to acquired inventory and employee entitlements, payable at completion and trued-up post completion
Minus a fixed amount of $3.4m, which will instead be paid by Metcash into escrow at completion and then applied in relation to certain warranties and indemnities (if
any)
The business sale agreement includes certain conditions precedent. Completion is expected to occur in the fourth quarter of FY24.
1.
2.
3.
4.
Note that Bianco Hardware Pty Limited has a pre-existing ownership interest of 60% of the shares in Bianco.
Enterprise Value (EV) represents the purchase price calculated on a cash/debt free basis.
Less an exclusivity fee, which was paid in December 2023.
The minimum earn-out payment is $Nil, which would occur if there is no growth in earnings (against the FY23 earnings of these businesses). A partial earn-out is payable, on a straight-line basis between the minimum and maximum earnings levels. The maximum earn-out of
$6.0m is conditional upon the combined business achieving an adjusted EBITDA that significantly exceeds the current earnings levels. The earn-out amount represents incremental deferred purchase consideration and is payable in 1Q FY28. The Management Earn-Out has not
been included in the pro forma EPS and implied multiple amounts, as it is only payable if there is growth above the FY23 earnings levels.
Metcash
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