Wellington, Oct 31 NZPA - Supermarket co-operative Foodstuffs has purchased Liquorland, which has 70 stores run by owner operators, from DB Breweries for an undisclosed sum.

Foodstuffs already owns liquor merchants Henry's and Duffy & Finn's and also sells wine and beer in its supermarket chains Pak'n'Save, New World, and Four Square.

The change of ownership was effective today and Foodstuffs said it was advised that there were no competition issues requiring clearance by the Commerce Commission because the liquor retailing market was fragmented.

The Inside Retailing website said the purchase was a major blow to rival Woolworths' liquor ambitions.

DB Breweries said it felt that off-premise retailing was no longer core to its business.

"Supporting independently owned and operated businesses is what we do best," said Foodstuffs NZ managing director Tony Carter.

"We think it's a great fit for both the Liquorland brand and our future growth strategy."

Foodstuffs is planning on keeping the brand and will run Liquorland as a separate business.

The deal is not a big one and was easily funded, said bankers. It is typical of a number of deals that have gone through in recent weeks in that the sale was to a trade buyer rather than a private equity company.

Predictions that merger and acquisition activity will dry up because of a credit squeeze resulting from the global financial meltdown are not proving correct but the type of buyer is changing.

Foodstuffs and Woolworths have both been considering what to do about the 10 percent stakes they each own in retailer The Warehouse and Mr Carter would not comment on that situation today.

Commerce Commission concerns were reduced when The Warehouse retreated from a foray into large scale grocery retailing in its Xtra store format. NZPA WGT pjg nb