The decision by the High Court to grant a positive decision to the appellant's Woolworths Australia [WOW.ASX] Foodstuffs and itself will make the coming months for the company very interesting.
The High Court decision to allow Foodstuffs and Woolworths to make bids for The Warehouse Group [WHS.NZX] means it is just the beginning of a long process of a bidding war, possible legal wrangles by the Commerce Commission should they wish to appeal the High Court decision in the Appeal Court and difficulties for either Foodstuffs or Woollies to get the required 90% stake for a takeover.
Both Foodstuffs and Woollies own 10% of shares each and they require at least 90% of shareholder approval to make a takeover successful so both companies could block their rival bids. Considering founder Stephen Tindall has a 51% majority, it is definitely up to him and his family interests to sell or not should bids be made.
It is possible that the difficulties of gaining a 90% approval could be got around by organising a complicated "takeover" structure in the guise of a "merger", as was done when Transpacific Waste effectively took over Waste Management in 2005. Only 75% shareholder approval is needed in this scenario.
At today's AGM shareholders were told that the company had strong cashflow and he dropped hints at a capital return to shareholders.
"In the absence of any major acquisition opportunity, the company will consider undertaking further capital management initiatives in the 2008 calendar year," Chairman Keith Smith
The bulk of sales for the company are made during the November /December Christmas lead up and look to be flat as well, due to high mortgage rates and petrol prices.
The positive news out yesterday led Warehouse shares up around 24% and by 5c to NZ$6.20 today.
Disc: I own WHS shares in the Share Investor Portfolio
Share Investor Q & A: Reader questions to Warehouse CEO Mark Powell
Share Price Alert: The Warehouse Group Ltd 2
Woolworths puts The Warehouse back on the shopping block
Share Investor's Total Returns: The Warehouse Group Ltd
The Warehouse Group Ltd: Takeover Speculation Resurfaces
Share Price Alert: The Warehouse Group Ltd
The Warehouse Group: Tips for the new CEO
The Warehouse Group: Should Ian Morrice Go?
Has the Warehouse lost its Mojo?
Stock of the Day: The Warehouse Group Ltd
The Warehouse Group Ltd: Takeover Prospect looking good on paper
VIDEO: Extended Ian Morrice Interview
Share Investor Q & A: Warehouse Group CEO Ian Morrice
Share Investor Q & A: Questions to The Warehouse' Ian Morrice
Long Term View: The Warehouse Group Ltd
Share Investor Short: Warehouse Group yield worth a look
The Warehouse Group: 2010 Interim Profit Review
The Warehouse: Big Brands, Big Opportunities
Warehouse strike opportunity to buy
Long Term Play: The Warehouse Group
Share Investor Short: Warehouse Group yield worth a second look
Woolworths supermarket consolidation an indicator of a move on the Warehouse?
Stock of the Week: The Warehouse Group
Warehouse 2009 interim profit a key economic indicator
When will The Warehouse bidders make their move?
Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
The Warehouse set to cut lose "extra" impediment
The Warehouse sale could hinge on "Extra" decision
The case for The Warehouse without a buyer
Foodstuffs take their foot off the gas
Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
Warehouse decision a loser for all
Warehouse Court of appeal decision in Commerce Commission's favour
MARKETWATCH: The Warehouse
The Warehouse takeover saga continues
Why did you buy that stock? [The Warehouse]
History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon
Discuss WHS @ Share Investor Forum - Register free
Download WHS company reports
Shop online at The Warehouse
NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill
c Share Investor 2007 & 2009