Wholesale grocer and liquor distributor Metcash Ltd has snapped up a stake in Australia's biggest independent retail chain, Ritchies Stores Pty Ltd.
Metcash, which is in the throes of a hostile tilt at supermarket chain Foodland, said on Monday it had agreed to buy 26 per cent of Ritchies IGA, from July 2005, for an undisclosed sum.
"It is envisaged that the acquisition will be funded from Metcash's existing cash resources," Metcash said.
Metcash chief executive Andrew Reitzer said the purchase would benefit both companies by providing a closer alignment of their business interests and strategy.
"In addition, the investment will facilitate the longer term retention of Ritchies as a key customer of Metcash's grocery distribution business and provide funding to enable Ritchies to grow and expand," Mr Reitzer said.
Metcash finance director Edwin Jankelowitz said the company was always growth focused.
"We say that alignment agreements are being concluded other major IGA retailers, and we will continue to invest in these partnerships both large and small," Mr Jankelowitz said.
Ritchies IGA operates 38 supermarkets in Victoria and NSW, trading as Ritchies Supa IGA, while Metcash is behind IGA supermarkets, Campbell's Cash & Carry and Australian Liquor Marketers.
Management of the group will remain with the existing team while Metcash representatives will join the board.
Last month, Metcash concluded the buy-out of its South African parent Metoz.