Can Metcash nail the HTH deal?

Past logic suggests the ACCC is likely back Metcash’s HTH bid next week, but there are complications.

Today is the final day for independent hardware stores to lodge objections to the proposed $200m Metcash bid for Woolworths Home Timber and Hardware (HTH), with opinion divided on which way the ACCC will decide.

It gave punters just one week to respond to the Metcash undertakings, which as chance would have it virtually mirrored those which Woolworths used when it acquired Danks seven years ago.

Opponents of the deal say, with some logic, that the undertakings are meaningless and don’t go nearly far enough in protecting independents.

The Metcash purchase would cut the number of wholesale suppliers in the industry to one: the Metcash owned business supplying its Mitre 10 stores.

The logic of the Full Federal Court decision in the Metcash-Franklins case in 2011 would suggest the court would back the Home Timber and Hardware acquisition on the grounds it would make Mitre 10 a better competitor for Bunnings.

If that's what a court would say then the ACCC is unlikely to make a ruling contrary to this view, even if there are some complicating decisions in the ruling, like the fact this deal would reduce wholesale numbers from two to one, as against four to three in the Franklins decision.

Bids for the HTH deal are due in on Monday in a process being run by Citigroup.

The ACCC has pencilled tomorrow week as decision day, which could mean a statement of issues.

But that would seem unlikely given it has already released the Metcash undertakings, which would indicate it thinks they are capable of being enforced.

Some argue Metcash should be forced to sell off stores to stress its role as an independent wholesaler.

This is unlikely to be accepted by Metcash.

At the very least the naysayers argue there should be detailed clauses in the undertakings over lease terms and tenure.