SYDNEY, Aug 24 (Reuters) - Australian retailer Metcash Ltd MTS.AX said on Wednesday it will buy the Home Timber & Hardware group, owned by Woolworths Ltd WOW.AX , for A$165 million ($125.48 million) in cash.
Metcash, in a statement, said it will fund the acquisition through a fully underwritten institutional placement of A$80 million in equity and A$85 million in debt.
The purchase price equates to a multiple of seven times underlying earnings before interest, tax, depreciation and amortisation (EBITDA), before synergies and an anticipated release of working capital, Metcash said.
Metcash and Woolworths placed their shares on a trading halt ahead of the announcement. resulting business would emerge as a stronger rival to Australia's biggest hardware retailer Bunnings, owned by Wesfarmers Ltd WES.AX . ($1 = 1.3149 Australian dollars)