Woolies, Lowe's move to acquire Danks

Woolworths Ltd and joint venture partner Lowe's Companies Inc have moved to compulsorily acquire Danks Holdings Ltd after the competition watchdog approved the deal with strings attached.

The Australian Competition and Consumer Commission (ACCC) on Wednesday approved the proposed $87.6 million takeover bid after the two companies accepted court enforceable undertakings on competition issues.

The ACCC said the undertakings would address concerns it had over discrimination against wholesale customers of the proposed joint venture who are hardware retailers supplied by Danks which would become its retail competitors.

Woolworths said its joint venture vehicle with Lowe's, named Carboxy Pty Ltd, held 96.2 per cent of Danks' shares and would now move to compulsory acquisition of the company.

The offer for Danks is now free from all conditions and will close on November 19, Woolworths said.

Carboxy is two-thirds owned by Woolworths and one-third by Lowe's, and was created as the vehicle for both companies to make a $13.50 per share cash bid for Danks.

Danks has supplier relationships with 583 Home Timber & Hardware, Thrifty-Link Hardware, and Plants Plus stores and 939 other independent retailers.

Woolworths and Lowe's are hoping to take on Wesfarmers' successful hardware chain, Bunnings, and carve up Australia's $24 billion hardware market.

They aim to create 150 big box hardware stores in five years.

Hardware chain Mitre 10 says the ACCC's decision to approve the takeover bid for Danks does not adequately account for wholesale competition issues.

Mitre 10's chief executive Mark Burrowes said the ACCC "should have given more weight to the argument that a reduction in competition at the wholesale hardware level could lead to the sector being dominated by the two major supermarket chains - another duopoly in Australia."

Mr Burrowes said Mitre 10 was disappointed in the decision.

"Mitre 10 will continue to do what we have always done, take the fight up to our competitors, and continue to support independent retailers," he said in a statement on Wednesday.

"That is why we will be encouraging Danks store owners who are unhappy with the decision to join our national network of over 450 stores."