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Today, eCargo Holdings Limited (ASX:ECG) has announced that it has acquired 85 percent of Metcash Export Services Pty Limited, which includes its subsidiary Metcash Asia Limited, a wholly-owned foreign enterprise in China, from Metcash Trading Limited (âMetcashâ), a wholly-owned subsidiary of Metcash Limited (ASX:MTS) (âMetcashâ), one of Australiaâs largest wholesalers.
Metcash Limited (ASX:MTS) is a marketing and distribution company operating in the food and other consumer goods sectors. The Company operates distribution centres serving grocery products for independent retail grocery stores, liquor distribution centres and cash and carries warehouses which serve retailers and businesses in the grocery, liquor, food services and convenience stores.
The acquisition was first announced at the inaugural China International Import Expo held in Shanghai on November 8, 2018. The successful acquisition of 85% of Metcash Asia Limited allows ECG to create a one-stop offering for businesses intent on capturing the attention of Chinaâs growing consumer market, taking their products to Chinese virtual and bricks and mortar shelves.
The consideration which has been paid by the ECG is A$2.5 million plus 85% of the net asset value of the business of A$5.8 million and deferred compensation of up to A$3.5 million funded by a combination of ECGâs existing cash reserves and available facility.
ECG is also entering into exclusive pacts with the company. These pacts will be covering the supply, services and licencing to provide the needed access to the companyâs extensive sourcing capability and private label development in Australia.
While commenting on the acquisition, Metcash Group CEO, Mr. Jeff Adams said, âWe are looking forward to building a strong relationship with ECG and its management. We thank all our team members who are transitioning as part of this transaction and wish them well in the future.â
As part of the acquisition, the Metcashâs Australian based export team that services China will merge with ECGâs Sydney-based group, while Metcash Shanghai-based team will be integrated with ECG and Jessicaâs Suitcase teams in China meaning ECG will have an integrated team of over 50 people on mainland China to help Australian and international brands reach the Chinese consumers from ECGâs corporate headquarters in Hong Kong.
Now, letâs have a glance at the companyâs stock performance and the return it has posted over the last few months. The stock last traded at a price of $2.550, down by 0.391% during the dayâs trade with a market capitalisation of ~$ 2.33 Bn. The counter opened the day at $2.570, reached the dayâs high of $2.600 and touched the dayâs low of $2.530 with a daily volume of ~3,897,443. The stock has provided a Year Till Date return of 7.56% & also posted returns of -7.25%, -7.91% & 1.59% over the past six months, three & one-months period respectively. It had a 52-week high price of $ 3.730 and touched 52 weeks low of $ 2.250, with an average volume of 3,968,449 approximately.
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