Primary wants to sell two businesses to recoup some cash after its A$2.7 billion takeover of Symbion Health which ended a year-long takeover battle. The pharmacy distribution and consumer businesses combined could fetch around A$900 million (US$857 million).
Metcash, which has been looking for a new business to add to its wholesale grocery and liquor divisions for some years, hopes to use its logistics and supply chain expertise to run the pharmacy business more efficiently.
"I would have thought given their expertise, their chances should be very high, but it all depends if private equity are willing to pay over and above the economic value of the business. And that will depend on the cost of funding," said BT Investment Management analyst Sondal Bensan.
Private equity firm Archer Capital has expressed interest in the two Symbion businesses.
Metcash had originally formed a joint venture with Sigma Pharmaceuticals to bid for the assets, with Sigma chasing the consumer unit which is Australia's largest distributor of vitamin supplements.
However, Metcash said on Tuesday that Sigma had been unsuccessful in its part of the bid. It gave no update on the status of the joint venture. Final bids are due July 10.
Metcash, which operates the IGA Distribution business that supplies 2,500 independent supermarkets, said net profit rose to A$197.4 million ($188 million) in the year to April 30, slightly above market forecasts of A$195.2 million, according to a Reuters Estimates survey of 10 analysts.
Sales at its new fresh food division rose 10 percent.
Metcash said total sales for the month of May were satisfactory, and despite tighter economic conditions it expects earnings per share for 2009 to rise to between 28.3 cents per share and 29.3 cents, up from 26.6 percent in 2008.
Analysts are forecasting EPS of 28.7 for 2009.
Metcash is the third largest player in Australia's grocery market and says the independent supermarkets it supplies had an increase in market share to 19.2 percent from 18.6 percent.
It battles the domination of the two major chains, Coles which is owned by Wesfarmers, and Woolworths, which have a combined 76 percent market share.
Metcash Chief Executive Andrew Reitzer told a government inquiry into grocery prices on Monday that its larger rivals enjoyed a "cosy duopoly" and the two only competed on weekly specials and not on the majority of everyday items.
The recent entry of German discount chain Aldi to Australia has had little effect on the two large chains, taking a 7 percent share in the eastern states where it operates but only a 3 percent national share.