Woolworths Australia confirms deal to buy NZ supermarkets

Woolworths has agreed to buy Foodland's New Zealand businesses as well as 22 of Foodland's Australian stores.

Woolworths will pay around A$2.5 billion ($2.7 billion) for the businesses.

Woolworths chief executive Roger Corbett said he believed Woolworths would be able to leverage its retail experience and scale into New Zealand.

"Going forward, Foodland also provides an attractive platform for future growth opportunities in New Zealand including general merchandise and liquor," he said in a statement.

The Australian assets Woolworths will buy as part of the deal are 22 Action stores, including three development sites, in Western Australia, Queensland and New South Wales.

Woolworths will offer Foodland shareholders a mix of cash and Woolworths shares.

The deal has been unanimously recommended by the Foodland Board.

Foodland operates Foodtown, Woolworths and Countdown chains in New Zealand.

Australian grocery wholesaler Metcash will buy the remaining Foodland assets. Metcash will pay A$780 million in cash or A$859 million in shares for Foodland's Australian business -- excluding the Action stores.

Shares in Woolworths, Metcash and Foodland were placed on a trading halt yesterday, sparking speculation that Woolworths and Metcash would launch a joint bid for Foodland.

- NZPA