Metcash Ltd said on Thursday that it has reached an agreement with Pick n Pay Retailers Ltd to takeover the Franklins supermarket outlets for about $215 million.

The supermarket chains are owned by Interfrank Group Holdings Pty Ltd, which currently number to about 85 stores and upon completion of the sale deal, Metcash plans to implement a store sale program and sell the stores to independent IGA retailers.

For the time being, Metcash would run the business while the store sale program is being implemented, which should take several months to complete, according to the company.

Company chief executive Andrew Reitzer said that in acquiring the Franklins supermarkets, the IGA network would boost its competitive standing against the national chains of Australia's grocery market and increase Metcash's market share of supplied retailers from 11 percent to 17 percent.

Mr Reitzer added that the company is expecting that retailers who are set to buy the stores "will lift each store's performance through the successful combination of their own retailing expertise and through utilising the strength, services and support provided by Metcash."

Metcash said that the Franklins takeover should deliver an additional $500 million per annum of wholesale business to the company's business, adding that shares uplift should reach 1.5 cents to 2.0 cents per share in the first full year once the sale of the stores are completed.

The company said that the deal is still subject for approval by the Australian Competition and Consumer Commission (ACCC) and once Metcash got the ACCC's nod, the agreement would be funded by the company's bank facilities.

As of 1032 on Thursday, Metcash shares were trading at $4.27, gaining eight cents or 1.91 percent.