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ACCC Approves Bunnings Acquisition of Adelaide Tools

Adelaide Tools

The competition regulator has given Bunnings the green light to purchase specialist tools retailer Adelaide Tools, but says it will closely scrutinise any future acquisitions by Wesfarmers' chain 

The Australian Competition and Consumer Commission (ACCC) on Tuesday approved the acquisition of the Adelaide-based company, saying the deal was unlikely to lessen competition due to the growing number of specialist tools retailers across Australia.

However, ACCC chair Rod Sims said: "Anything that further entrenches Bunnings’ position, or attempts to remove current or potential future competitive threats to Bunnings, will be very closely scrutinised.

"The ACCC’s decision not to oppose this deal should not be read as an indication that the ACCC will take a similar view on future possible acquisitions by Bunnings. Expansion into more specialist retailing in particular segments by acquisition of existing competitors, as opposed to organic growth, will be very carefully considered."

Bunnings first announced the purchase last October, entering into an agreement to buy the five family-owned stores, plus one specialist mower store, for an undisclosed sum. Adelaide Tools is a 70-year-old business, run by the Peach family. It will continue to operate separately following the acquisition.

The company expected the deal to pass without a hitch, but in November the ACCC flagged concerns with the acquisition, fearing it would weaken competition for trade customers.

Bunnings operates 302 hardware stores throughout Australia, 15 of which are located in the Adelaide region. Bunnings managing director Mike Schneider said the company was pleased with the ACCC's decision but expressed his displeasure with the five-month-long review.

"We do believe it’s important that timelines for merger reviews are appropriate and provide certainty for businesses," he said.

"Adelaide Tools is a quality business with a great team, premium brands and a reputation for great customer and after-sales service. We’re so happy to be able to provide clarity for the Adelaide Tools team, particularly in the current uncertain environment."

Despite the regulator's warning, Mr Schneider said Bunnings would not stop seeking "opportunities to provide better value and service to customers" in the future.

Source: Insight DIY & The Age

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31 March 2020

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