When will The Warehouse bidders make their move?

The length of time that has passed between The Warehouse Group [WHS.NZ] deciding to drop their "Extra" format stores-the impediment that the Commerce Commission most recently successfully argued in the Court of Appeal was the reason the company couldn't be sold to its two current suitors-doesn't look encouraging for any positive outcome anytime soon.

Just when are they going to make a move?

In January, The Australian reported that both The Warehouse' suitors were "still considering" a purchase of the company .

There are a few reasons why Foodstuffs and Woolworths Australia [WOW.ASX] The Warehouse' two suitors, might be delaying or reconsidering a move.

1. the current uncertain economic climate might make a bid less attractive. I would argue that any bidder might be able to turn this to their advantage though by being able to bid lower.

2. capital maybe harder to obtain in order to make a bid.

3. both suitors could be waiting for a decision in the Supreme Court where Woolworths has sought leave to apply to have the Appeal Court decision quashed

4. Waiting for a response from the Commerce Commission to The Warehouse decision to dump their "extra" format stores.

5. A new proposal from founder and majority shareholder Stephen Tindall to take the business private.

The biggest impediment to a quicker sale process is The Commerce Commission's Paula Rebstock and her failure to make a ruling post the Warehouse ditching their Extra format stores in October 2008.

The Extra format stores were the main impediment, from the Commission's point of view, for denying the sale of The Warehouse and now that they have gone a positive announcement in The Warehouse favour on this matter would let the bidding process begin.


Disclosure: I own WHS shares


The Warehouse Group @ Share Investor

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

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Warehouse decision a loser for all

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In the absence of a detailed summary of the decision out today by the Court of Appeal to stymie a bid for The Warehouse by Foodstuffs or Woolworths Australia, I have to say I am surprised by the decision.

This from Paula Rebstock, Commerce Commission chairman

"New Zealand consumers know that more competition is needed in the supermarket sector. In coming to its decision to decline the acquisition the Commission considered that The Warehouse had already brought important new dimensions to supermarket competition, and potential competition, through its innovative supercentre stores."

What "new dimensions" have the Warehouse brought to Supermarket competition?

Answer? None.

It has 3 "Extra" format stores whose performance thus far has been underwhelming and its potential for the future is in doubt.

The Commerce Commission and Paula Rebstock have made a name for themselves over this appeal and it seems that was all this exercise has been about. Commercial realities have been left in the dust.

Either the legal team for the defence has lost an easily winnable case and or the Court of Appeal Judge is a knuckle dragging, dribble mouthed fool for making such an inconceivably out of touch decision.

Was the Judge off his medication that day?

That is the only conclusion that a sane individual can come to.

The Commerce Commission's legal team had only one string to their bow, the Warehouse Extra stores and their possible beneficial impact on grocery prices but they have no material influence in the supermarket sector and are unlikely to in the future. They have less than .05% of the grocery market.

Rebstock and her Commission have dragged this possible sale saga out for far too long, it has cost the three companies involved, the Kiwi taxpayer, The Warehouse,Foodstuffs and Woolworths shareholders and ultimately the New Zealand consumer.

Economies of scale can be brought to bear if one of the parties bought The Warehouse and that ultimately means cheaper grocery prices.

Unless a likely appeal to the Supreme Court is successful, New Zealand consumers will be the biggest losers.

Warehouse shares were down .60c to NZ$3.22 per share on 4.6 million shares today on the news.


Disclosure I own WHS shares


The Warehouse @ Share Investor

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 Court of Appeal decision in Commerce Commission's favour
Why did you buy that stock?[The Warehouse]
The Warehouse set for turbulent 2008
Commerce Commission makes a meal of Warehouse takeover
Warehouse Court of Appeal case lay in"Extras" hands
WHS Court of Appeal case could be dismissed next week
Borders decision an indicator of Warehouse takeover outcome
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

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The Warehouse Financial Data

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• Charts
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• News
• Announcements
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Commerce Commission needs to derail KiwiRail owners

When your competitor sets the rules for competition you know there is something horribly askew.

With the buyback of Toll Rail, in the form of KiwiRail, the New Zealand Government, by way of legislation, can pass any sort of tax, competition law or edict, making things difficult for rail's competitors, the trucking industry.

Even before Toll Rail passed into taxpayer hands midnight Tuesday 1 July, a deal had been stitched up to allow free rentals for several years, on freight depots for the trucking division, the only profitable part of Toll's NZ freight business that the NZ government let them keep.

When that was proven too politically volatile for the public to swallow, the check book was pulled out again and NZ$18 million of taxpayer cash was added to the initial purchase price to put Toll's trucking division in a enviable position when compared to its competitors,.

Now the skewing of the fork when it comes to competition in the freight sector continued with an up to 10% increase in road user charges for diesel trucks on Tuesday July 1, the same day rail was renationalised.

So what is happening here-avoiding the obvious political point of using taxpayer money-is that money and legislation is being used by the government to not only give corporate welfare(sorry I couldn't help myself) to a private company by handing them $18 million bucks to compete against other private trucking companies, but you have the owner of an inefficient, loss making business that will never make money, trying to even the competitive playfield, for them, by penalising its competition with extra taxes!

My head is dizzy with vitriol!!

I will be indirectly hit in the pocket here because I own shares in Mainfreight[MFT] a very competitive, efficient and profitable transport player . Toll trucking have a definite competitive advantage over such companies with that $18 million of taxpayer funds in their back pockets.

Like the State run Air New Zealand[AIR] freezing out competition in the domestic airline industry, the squeeze on transport and trucking companies by the Labour government will continue as long as they remain in office, because rail just cannot compete on a even footing.

Finally, the main point of this column was to make a point to the Commerce Commission, who always check out this blog when their name is mentioned, and one of their office drones googles over a soy latte to find out who is talking about them. Such actions described above are clear violations of competition law.

Instead of salivating over hot State funded QC's appealing against the The Warehouse[WHS] case that you lost in the High Court why don't you get off your ivory soaked easy chairs and do something in the trucking business Vs KiwiRail anti competitive case.

Government's actions via their ownership of KiwiRail make their anti-competitive moves against the private transport industry a banner case.

To win this Ms Rebstock, Chairman of the CC {photo above} would be an easy case and get you the attention that you so obviously desire.

I'm waiting with baited breath for you to file your writ against KiwiRail.

Tell me when to exhale.

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The Warehouse set for a turbulent 2008

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The Court of Appeal will hear on April 29, the Commerce Commission case in seeking to overturn a High Court ruling allowing Woolworths Australia [WOW.ASX] and Foodstuffs supermarket companies to bid for The Warehouse Group [WHS.NZ]

In the wake of flat profits reported on Friday14 (NZ Time) the outcome of this case will come under closer scrutiny by investors in a New Zealand sharemarket racked with uncertainties.

Unfavourable global market conditions, a dismal forward look at the New Zealand economy, a drop in profit forecast by The Warehouse itself, and local and foreign investors disgruntled over recent Government intervention in Auckland International Airport [AIA.NZ] and their assault on private property rights, makes the case for a quick decision by the court even more compelling.

Investors have voted overwhelmingly to sell their shares in Auckland International Airport on Thursday last week and the same will be the case when and if the 3 parties to The Warehouse saga are given the go ahead to make a deal.

As mentioned before in this column I have every belief that the deal will happen, even if it has to go the way of the Supreme Court sometime at the end of 2008.

The only drawback to a Supreme Court ruling though is that the bench is stacked with politically appointed Labour Party Judges, so a verdict there could be in question.

The motivation for the buyers in this process to acquire, I think, will be higher than before the current credit squeeze. Clearly if credit gets horrendously expensive, the weaker player in terms of finance capabilities, Foodstuffs, may find it difficult to offer a competitive price for The Warehouse and therefore have to drop out.

Woolworths still have the upper hand in terms of available financing so the fortune favours the Aussies and the credit mess we are facing may in actual fact go in their favour . They have large cash reserves and future cash revenue to boot.

We await with keenness for a decision from the High Court, but uncertainty over the decision, given current political overtones and issues over perceived "kiwi assets falling to filthy foreign control", with a decision to also be made by the overseas investment office, may leave investors in The Warehouse disappointed, in an election year filled with emotional baggage left over from the distant 1980s and a Socialist government bent on Neo Muldonism.


Disclosure: I own WHS shares


The Warehouse Group @ Share Investor

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

Share Investor Forum-Discuss this topic


Related Links

The Warehouse Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon reading




The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy by Charles Fishman
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c Share Investor 2008 & 2009

Court of Appeal delays Warehouse bid

Contrary to a comment made earlier last week when High Court Judge Jill Mallon had said an appeal could be made by the Commerce Commission to overrule her decision in November 2007, that Foodstuffs and Woolworths Australia [WOW.ASX] could make a bid for The Warehouse Group [WHS.NZ] and it should be under the condition that the case was heard urgently, the Court of Appeal has ruled that it would hear an appeal on April 29.

The latter court date will be after a court imposed ban on bidding for the Warehouse ends on February 29.

It is difficult to see a bid be made by either Foodstuffs or Woolworths after the bid deadline but it has been an unusual tussle so far and stranger things have happened in other takeover processes.

It would be presumptuous for any of the two possible bidders to show their hand early though and clearly wouldn't look good for their defence in the Court of Appeal case because the last thing the defence needs is a pissed off learned judge because his authority has been undermined in his court.

What is clear though, is that we are unlikely to get a result either way anytime soon.

If either side doesn't get their desired result in April they are likely to have another go at a case packed Supreme Court in Wellington.


Disclosure: I own WHS shares


The Warehouse Group @ Share Investor

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

Share Investor Forum-Discuss this topic


Related Links

The Warehouse Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Reading



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c Share Investor 2008 & 2009