E-commerce company ECG has announced it will buy 85 per cent of wholesaler Metcash’s China export business.
The companies have entered into a binding Heads of Agreement. This will see ECG will acquire 85 per cent of Metcash Export Services, which includes Metcash Asia, its China-based subsidiary.
ECG says the acquisition allows it 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”.
According to ECG, the combined businesses will offer:
- e-commerce operations and content-generation services
- online incubation platform for small and emerging brands
- B2C multi-platform, multi-brand e-commerce hub for established brands
- B2B wholesale distributor in tier-1 to tier-4 cities with tailored market activation strategy; and
- key opinion-leader endorsement on key products.
Executive Chairman of ECG John Lau said: “This transaction is the missing piece of the puzzle for ECG. The three key blocks are, first, good products at a good price. Second, good logistics. And, third, good sales and marketing into the right channels.
“While we’re good at logistics, the Metcash supply agreement gives us access to quality Australian products at competitive prices. ECG enables access to the key offline wholesale distribution channels in China, particularly outside the tier-1 and tier-2 cities.”
Metcash Group CEO Jeff Adams said: “China continues to provide a good opportunity for growth. We believe this arrangement, which includes retaining part ownership, fits well with our strategic direction.
“We’re excited about the opportunity of combining ECG’s China expertise and presence with Metcash’s extensive purchasing capability. We look forward to supplying quality products to China through this venture.”
Under the Heads of Agreement, ECG will enter into individual agreements with Metcash covering supply, services and licensing. This will give ECG access to Metcash’s extensive sourcing capability and private-label development in Australia.
The companies expect to complete the agreement by the end of February 2019.