Metcash must divulge loyalty deal with 7-Eleven

The tribunal instructed Metcash to clarify details of a loyalty agreement that formed part of the transaction. In terms of the agreement, Metcash would require 7-Eleven franchisees to buy a certain proportion of their goods from Metcash.

Business Day
November 9, 2003

Metcash must divulge loyalty deal with 7-Eleven
Trade and Industry Correspondent

METRO Cash & Carry (Metcash) appears to have more pressing problems than the Competition Tribunal's concerns raised yesterday over its proposed acquisition of 7-Eleven Africa and certain assets of the 7-Eleven Corporation.

The tribunal instructed Metcash to clarify details of a loyalty agreement that formed part of the transaction. In terms of the agreement, Metcash would require 7-Eleven franchisees to buy a certain proportion of their goods from Metcash.

Metcash investor relations officer George Cocolas said the tribunal's concerns were about the level of this proportion, which had not been stated. But Metcash has more problems. "One or two" conditions of the acquisition were outstanding. These were preventing creditors from being paid, he said.

Metcash said in September that creditors would have to wait longer for payment. But the bulk of 7-Eleven
creditors had not yet been paid, Cocolas said.

Regarding the outstanding conditions, he referred to Metcash "obtaining security", but would not elaborate on this.

A court case against 7-Eleven Corporation brought by a number of its franchisees over payments of discounts and rebates was also still pending.

Cocolas did not believe the outstanding conditions had "deal-breaking" potential.

The acquisition would be by newly formed company Fluxrab Investment, a wholly owned subsidiary of Metcash Trading.


Risks: Secret kickbacks and rebates, Must buy only through franchisor (tied buying), South Africa, 20031109 Metcash must

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