GROCERY giant Woolworths Limited has announced its plans to move into the $24 billion hardware sector through acquisition of Danks Holdings Limited (Danks), a joint venture with Lowe's and ambitions to secure 150 sites for large format hardware stores within five years.
Founded in 1946 and based in North Carolina, USA, Lowe's has grown to be the second largest home improvement retailer worldwide and the 7th largest retailer in the U.S.
According to Woolworths, Danks is Australia's second largest hardware distributor supplying 583 Home Timber & Hardware (205), Thrifty-Link Hardware (312) and Plants Plus Garden Centre (66) stores plus 939 independent hardware stores. The Danks Board has unanimously recommended that its shareholders accept the Woolworths/Lowe's offer.
Through its acquisition of Danks, Woolworths states that it intends to grow the independent hardware sector; enhance the value of the Danks brands; enable independent retailers to offer their consumers a better deal in their local hardware store through increased range and competitive pricing; and retain the wealth of knowledge and experience in the Danks management team and expand employees career opportunities
Under the terms of the joint venture agreement, Woolworths and Lowe's aim to "work together to share best practice and create a leading home improvement business in Australia" and as part of the arrangement, Lowe's will own a one-third share of the new home improvement business and will "contribute capital accordingly".
Woolworths has a target to secure in excess of 150 store sites within the next five years and have stated that they have already secured entitlement to 12 sites and is currently in final negotiations to secure a further 15 sites for greenfield development for potential destination home improvement stores of more than 10,000 sqm.
Woolworths expects to open its first destination home improvement store in late 2011.