Australian Watchdog Concerned Woolworths’ Takeover May Hurt Competition

A proposal by Australia’s Woolworths to buy about two-thirds of PFD Food Services and its properties may hurt competition in the food sector, the country’s competition regulator stated on Tuesday, December 15.

The proposed acquisition could increase Australia’s biggest grocer’s already “substantial” bargaining power in its dealings with food manufacturers, Australian Competition and Consumer Commission Chair Rod Sims said in a statement.

Woolworths announced in August it would pay a combined AU$552 million (US$415.7 million) for a 65% stake in PFD and 26 freehold properties that would be leased back to the country’s second-biggest food service firm.

PFD Foodservices is the second-largest player in Australia’s foodservice industry with an annual turnover of AU$2.1 billion. The company purchases foodstuffs from manufacturers and distributes them into businesses such as cafes, pubs, restaurants, and cinemas.

Woolworths is planning to acquire 65% of the business from the founding Smith family, who will retain a 35% stake, as part of a broader plan to expand the retailer’s operations beyond the supermarket and drinks space.

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