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Frucor buys into Aussie distribution

By Phil Boeyen, ShareChat Business News Editor

Wednesday 6th December 2000

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Frucor (NZSE: FRU) has confirmed plans to set up its own distribution network in Australia by purchasing the sales and distribution systems of juice company Spring Valley for A$1 million.

Spring Valley distributes Frucor's energy drink V but the company has been sold to Cadbury Schweppes.

The sale has given Frucor the chance to set up its own distribution business in Australia using a team already familiar with V and its customers.

Frucor MD Mark Cowsill says the company has always envisaged broadening its distribution platform to achieve the next stage of development in Australia.

"Utilising the Spring Valley sales and distribution systems provides us with an excellent basis for this and will support the strategic growth of V and additional Frucor products in the Australian market."

Under the deal Frucor will pay A$1m and assume some lease liabilities related to Spring Valley's sales and distribution activities.

The acquisition will result in slightly higher costs for its business in Australia in the short term and will reduce forecast EBITDA for the current financial year by 4.1% to $40.8 million.

However the company expects increased costs will be offset by a more focused sales organisation and improved management efficiencies and it estimates a 10-12% increase in budgeted sales volumes for the Australian business for the rest of the financial year.

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