SYDNEY, Australia -- Jewel Food Stores here is mulling offers from potential buyers of its 96-store operation.
en though it wasn't actively seeking to sell the company, according to J.R. Fleming, Jewel's chairman.
"The decision to consider offers from outside interests for Jewel is a difficult one for both myself and my family, as we have been involved in grocery retailing since early this century and had built Jewel up from small origins in 1971," Fleming said. "This decision was prompted by some unsolicited offers that caused the family to give serious consideration to their ongoing interest in retailing." Fleming said the security of Jewel's 5,000 employees will be "one of the key matters the family will consider" as it weighs a potential buyer.
Jewel is a wholly owned subsidiary of South Terrace Holdings Pty. Ltd., a company owned by the Fleming family. Jewel has sales exceeding $592 million U.S. (at an exchange rate of 74 cents Australian equals $1 U.S.) and market shares of approximately 8.9% in New South Wales, 3.7% in Victoria and 0.7% in Queensland, the company said. Its principal wholesaler, Davids Ltd. here, issued a statement, following Jewel's disclosure of the tender, in which John David, executive chairman, said his company is ready to negotiate a supply agreement with any new owners of the Jewel chain. David expressed regret over the pending sale, noting, "Jewel is the last major independent retailing group in Australia, and Jim Fleming and his family have kept the supermarket chains honest by providing an aggressive low-price alternative. "The purchase or breakup of Jewel by one of the chains would be a tragedy for the consumer. The chains will see the acquisition of Jewel as an opportunity to reduce price competition in the most hotly contested markets -- a point likely to be of concern to the Trade Practices Commission -- and there is a distinct possibility that the commission would seek to prevent any of the chains from acquiring Jewel." Even if Davids loses Jewel as a customer, the effect on the wholesaler would be relatively small, David said. "Jewel represents only 12% of the current Davids Group sales, and no change to the existing supply arrangements would be expected within the current fiscal year," he explained.