AUSSIE WHOLESALERS' SPLIT PUTS END TO MERGER PLANS

RICHARD SNARE

SYDNEY, Australia (FNS) -- An ambitious plan to merge four independent grocery wholesalers in Australia collapsed late last month when two of the major players in the proposed deal split ranks.

The break-up of the group came amid mounting concern about a pending Trade Practices Commission report on the proposed deal. Commission approval was required before the merger could be completed.

Davids here, Australia's largest grocery wholesaler with annual sales of about $2.1 billion, and Foodland Associated, which is the third-largest Australian wholesaler and market leader in western Australia, pulled out of the proposed deal.

John David, executive chairman of Davids, said the company was keeping its options open, but believed "that its interests would be best achieved by floating the Davids Group early in 1994."

Analysts said a public offering of Davids could raise about $330 million.

The merger would have created a wholesale distributor with a 26% share of the national market and annual sales of about $5.7 billion, which the group said would make it the second largest distributor in Australia.

Woolworths is the leading grocery distributor in Australia with an estimated 30.4% market share. Coles Myer ranks second, with a 25.4% share.

Under the proposed merger plan, Foodland would have paid about $300 million in stock to acquire the privately held Davids operation. Davids would have ended up with a 34% share of Foodland, which was the vehicle for the merger.

Meanwhile, Foodland announced plans to push ahead with its discussions with Independent Holdings Ltd. of Adelaide, Australia, and Composite Buyers Ltd. of Melbourne to try to create a national wholesale network.

Independent Holdings and Composite Buyers were the other two companies in the proposed merger. The companies have annual sales of about $550 million and $1.5 billion, respectively.

Foodland, a public company, has annual sales of about $1.46 billion.

After the merger discussions broke up, David Fawcett, managing director of Foodland, said his company was still determined to see the creation of a third force in grocery retailing and wholesaling in Australia to challenge the dominance of Coles Myer and Woolworths.