Metcash Limited has signed a legally binding Heads of Agreement with Foodland Supermarket, the companies announced today.
Foodland Supermarket is the governing body for independent Foodland supermarket retailers in South Australia (SA).
The deal includes the proposed form of a long-term supply agreement. The agreement means Foodland retailers will commit to being supplied from Metcash’s proposed new distribution centre in SA for a period of ten years. The agreement is conditional on Metcash entering into an agreement for lease for the new distribution centre by December 21.
As per Metcash’s announcement on May 28, 2018, the agreement does not include Drakes Foodland supermarkets in SA.
Metcash has also signed long-term supply agreements with Foodland multiple-store owners. These include Romeo’s and Chapley’s, as well as the remaining members of the Foodland Supermarket Board, who are owners of Foodland supermarkets in SA.
The company has other existing fixed-term supply agreements with Foodland and IGA supermarket retailers in SA. In addition, Metcash now has long-term supply agreements with retailers representing most of its supermarket sales in SA (excluding sales to Drakes Foodland supermarkets).
In the meantime, Metcash and Foodland Supermarket are progressing their 10-year supply agreement with the remaining Foodland retailers in SA. Most are single-store owners.
Metcash also enjoyed a jump in share price yesterday after releasing its AGM presentation.
