Thursday, August 28, 2008

Foodstuffs take their foot off the gas

Foodstuffs Ltd, one of the two players locked neck for neck in a court bid over the last year against the Commerce Commission to allow them to make a bid for The Warehouse [WHS.NZ] say they will now drop their own appeal in the Supreme Court and leave it up to Woolworths Australia [WOW:ASX] the other player, to argue the case in the court.

Foodstuffs managing director Tony Carter has been reported as saying that Woolworths would argue a similar case, and saw no point in their joining, as they did in the Court of Appeal case that the Commerce Commission took, against a decision made in the prospective buyers favour in the High Court.

Having come this far, arguing cases in the High Court and Court of Appeal, I find it curious that Carter and Foodstuffs would now stand aside.

It just isn't in Carter's style to do the "softly, softly" approach. His company fought tooth and nail against Progressive-the former owner of part of the present Woolworths Group in New Zealand-buying the Woolworths brand to add to their Foodtown and Countdown brands a few years back.

It looks to me that Carter can see the possibility of Foodstuffs buying The Warehouse to be moving further and further away from its grasp.

"We will await with interest the outcome of the Woolworths appeal and, as we have consistently said, we would not rule anything in or anything out going forward..."

The fact that Woolworths Australia were the first party to make their bid for an appeal against the Appeal Court decision known publicly would indicate to me a more positive outlook that management have in being a successful bidder for The Warehouse.

There is no news out yet about whether the move to seek leave from the Court of Appeal to take the case to the Supreme Court is a happening thing but it is likely that leave will be given.

Given the backlog in the Supreme Court, it is unlikely that Woolworths will get a court date before Christmas and any decision, either way, will not be made until 2009. Yes 2009.

Shares in The Warehouse have prevaricated with the whims of the Courts. Vacillating in the high 6 buck range when the courts found in the possible bidders' favour, to less than NZ$3 after the decision not to allow any bids for The Warehouse from the Court of Appeal came out on August 15.

Shares closed down 3c to $3.35 today.


The Warehouse @ Share Investor

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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
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The fight for control begins soon

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