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Woolworths acquires PFD Food Services distribution centres for $249m

Woolworths Group has acquired 65 per cent equity of one of Australia’s leading foodservice suppliers, PDF Food Services. The deal includes ownership of PFD’s freehold distribution centre properties for $249 million.

On Wednesday August 19, Woolworths Group announced it has agreed to extend its strategic partnership with PFD Food Services.

Woolworths Group will initially invest $302 million in PFD to acquire a 65 per cent equity interest. The Group will also acquire PFD’s freehold distribution centre properties for $249 million which will be leased back to PFD.

PFD will continue to operate as a standalone business run by its existing management team, with the Smith family retaining 35 per cent of the company.

Woolworths Group CEO, Brad Banducci, said the Group is excited by the opportunity to invest alongside the Smith family in PFD Food Services.

“It is a business we have long admired and we have a shared vision for continued innovation, customer focus and investment in the food sector. We look forward to delivering even better experiences together for our customers as we continue to respond to their changing needs in a post COVID world,” he said in a statement on Wednesday.

Brad labelled the investment as a logical adjacency for Woolworths Group that will further support the evolution of Woolworths into a Food and Everyday Needs Ecosystem.

According to Woolworths, foodservice business focuses on hospitality industry, providing value add inputs at scale to ensure business needs. Target customers include QSR, pubs, restaurants, cafes, and convenience stores that purchase products in bulk.

“It will build on our existing partnership with PFD, the number two player in the large and fragmented out-of-home foodservice and non-retail business-to- business markets,” he said.

Brad said the Group will help support PFD’s growth through access to Woolworths logistics, digital and data analytics and operational capabilities.

“For Woolworths Group, it will enhance store range localisation and provide fleet synergies through better route and capacity optimisation across our combined network,” he said.

PFD Food Services CEO, Kerry Smith, said the company is confident they have found a partner with shared experience and expertise, but also “whose operations and vision for the future complement our own”.

“As a family owned and operated business which prides itself on its customer and supplier relationships, it is important that PFD operates as a standalone business, run by the existing team,” she said.

Like many other businesses, PFD’s current earnings have been impacted by COVID-19. Despite this, the investment is expected to be earnings per share accretive in the first full year of ownership and deliver a strong return on investment to Woolworths Group.

Transaction subject to ACCC approval and customary closing conditions. Completion is expected by the end of this year.

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