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 (“Metcash”), a wholly-owned subsidiary of Metcash Limited (ASX: MTS) (“Metcash”), one of Australia’s 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 China’s 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 ECG’s 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 company’s extensive sourcing capability and private label development in Australia.
While commenting on the acquisition, Metcash Group CEO, Mr. Jeff Adams said, “We 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.”
As part of the acquisition, the Metcash’s Australian based export team that services China will merge with ECG’s Sydney-based group, while Metcash Shanghai-based team will be integrated with ECG and Jessica’s 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 ECG’s corporate headquarters in Hong Kong.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the last few months. The stock last traded at a price of $2.550, down by 0.391% during the day’s trade with a market capitalisation of ~$ 2.33 Bn. The counter opened the day at $2.570, reached the day’s high of $2.600 and touched the day’s 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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