Australian wholesale distribution and marketing company Metcash has entered an agreement with Hydrox Brands to acquire 100% of the Home Timber & Hardware Group (HTH) for A$165m ($125m).

To be completed through Metcash subsidiary Mitre 10, the acquisition will be funded through a combination of equity and debt comprising a fully underwritten institutional placement of A$80m ($60.8m) and A$85m ($64.6m) in debt to be drawn from existing facilities.

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"Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long-term.”

Metcash Group CEO Ian Morrice said: “Both Mitre 10 and HTH are passionate about supporting independent retailers. The combination of the two businesses will mean that Metcash’s hardware business will have a turnover of A$2bn ($1.5bn).

“This increased scale, together with the opportunity to realise significant efficiencies, will enable us to be more competitive and deliver a better outcome for both our hardware retailers and their customers.

“The interests and values of Mitre 10 and HTH retailers are closely aligned. Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long-term.”

Expected to be complete by early October, the acquisition is unconditional and will result in a combined hardware network of 1,800 stores.

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The company said that the acquisition is in line with Metcash’s strategy to become a leading independent wholesaler.

The combined networks of Mitre 10 and HTH would help retailers from both groups to be more competitive as a result of the increased scale and extra efficiency opportunities.