Share Price Alert: The Warehouse Group Ltd 2

Another preemptive Share Price Alert, this time for The Warehouse Group Ltd [WHS.NZX].

The stock price has taken a dive of 23c over the last 2 weeks of June and finished trading down 2c to close at $3.43 at close of business last Friday.

The stock has previously found support around these levels at least 5 times over the last year (see 1 year chart above).

In an interesting turn of events late on Friday though, incoming CEO for Woolworths Ltd [WOW.ASX] Grant O'Brien, let it slip at while addressing members of the New Zealand Food & Grocery Council in Auckland that his company was still interested in acquiring additional shares in the big red retailing icon.

This of course changes everything and while the spectre of the Warehouse has been handing over its head for almost 5 years, this new indication from one of two possible bidders ups the ante again.

The two bidders paid between 5-6 bucks approx for their respective 10% shareholdings, so any value from a bid from Woollies would have to come north of the higher figure.

Buy on short-medium term speculation, for a tidy profit.

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Disc: I own WHS shares in the Share Investor Portfolio

The Warehouse Group @ Share Investor

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The Warehouse Group: 2010 Interim Profit Review
The Warehouse: Big Brands, Big Opportunities
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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
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When will The Warehouse bidders make their move?
Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
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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 2011

Woolworths puts The Warehouse back on the shopping block

Incoming CEO of Woolworths Ltd [WOW.ASX] Grant O'Brien let it slip at while addressing members of the New Zealand Food & Grocery Council in Auckland last Friday that his company was still interested in acquiring additional shares in the The Warehouse Group Ltd [WHS.NZX]

"We would very much like to be a larger owner of The Warehouse" and "It is a business that is of interest to us."and if you didn't get it the first two times, "It's a terrific business and it's a business ... that we're happy to be a part owner of..." NZ Herald, 25 June 2011

Subtlety is clearly not one of Mr O'Brien's traits but I guess these comments must be put in the context of an address that was much longer than these throw away lines and focusing on Woolworth's interests as a whole in this country rather than just on Wow's holding in the WHS.

The company is apparently interested in increasing the size of their business in New Zealand via the expansion of its Countdown supermarket brand and a full takeover of the Warehouse would be able to achieve part of that plan as the Warehouse have key stakes in retail sites that are hard to find in established areas.

Put this together with the fact that Ted Van Arkle, who has close ties to WOW, is to be appointed an independent director of the WHS on July 1 and investors have an interesting scenario to ponder.

There are of course several impediments to Woolies making a full takeover offer, not the least of which is their main competitor in this country, Foodstuffs, owning a 10% stake in WHS themselves, a similar sized stake to Woolworths.

There is still some argument over whether either Foodstuffs or Woolies have clearance to make a takeover for the red sheds. The last the market knew where the state of play on this was back in August 2008 when Woolworths decided to seek leave from the Supreme Court to appeal the decision of the Court of Appeal setting aside clearance for Woolworths to acquire The Warehouse. There has been no indication from Woollies as to whether they did get around to seeking leave and in the absence to the affirmative we must conclude that no filing has been made.

Having said that, the Commerce Commission, who blocked Woolies and Foodstuffs in the Court of Appeal stated back in October 2008 that Woolies simply needed to just re-apply to the commission rather than pursue the Court of Appeal decision in the Supreme Court. This was in the light of The Warehouse dropping their "extra" format stores which was the key reason why the commission gave for blocking a sale.

Another possible impediment would be Warehouse founder Stephen Tindall and his nearly 53% stake. Negotiations with him over price would have to start on the high side and his full support would be crucial to a successful takeover.

A full takeover offer is possible, contrary to what other business media are saying. Foodstuffs blocking stake of 10% means the threshold for compulsory takeover that is reached with 90% of shareholder acceptances is a key block to Woollies making a full bid for the company but the right pressure (from some of the possible scenarios below)and the right price might see Foodstuffs fold in the light that the company is under intense financial pressure and even more intense competition from their rival. I know this is a big stretch given that it would allow Woollies to almost double their retail footprint in this country but anything is possible.

The 10% stake that Foodstuffs owns may be able to be got around another way though, so my opinion again differs from other market commentators on this. According to the Takeovers Code a partial offer can be made for the target company of over 50% and if over 50% is not achieved shareholder approval can be made for acceptances under 50%.

This would allow any bidder to effectively take control over the company and make it difficult for other major shareholders like Foodstuffs to remain owners.

A bidder can also buy shares on-market up to a 20% stake without triggering any takeover play.

I have written extensively on this over the last five years since the first interest in buying a stake in the company came from Foodstuffs back in 2006 and have always been keen to hold onto my shares for the long-term. Given the poor performance of the company under current management, overseen by outgoing CEO Ian Morrice, my opinion now is that the company needs new direction, new life and probably a new owner and its stagnation as a business cannot be sustainable in the long run.

As much as I hate to say it, bring on the Aussies, they just maybe the saviour of this once great kiwi retail icon.

Lets hope if they do make a bid though that they do not get a bargain!

Disc: I own WHS shares in the Share Investor Portfolio

The Warehouse Group @ Share Investor

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

Warehouse Group Ltd: 2010 Full Year Profit Analysis
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 2011

The Warehouse Group Ltd: Takeover Speculation Resurfaces

Update 27 June 2011, Woolworths keen on expanding WHS stake

I am going to speculate on some speculation in Businessday this morning that the appointment of Ted van Arkel as an independent director of The Warehouse Group Ltd [WHS.NZX] means the sale of the company is back on the table.

Van Arkel has a long history and ties to retail in both New Zealand and Australia and has a hard nosed reputation both as a former managing director of Progressive Enterprises, owned by Woolworths Ltd [WOW.ASX] and as an independent director of multiple boards and chairman of Restaurant Brands Ltd [RBD.NZX] and Charlie's Group Ltd [CHA.NZX]. He has also known Stephan Tindal and chairman Graham Evans for a long time, working with Tindal, through George Court, and Evans through Woolworths.

Van Arkel's links to Australasian retail maybe indeed be just a sideshow in terms of where the Warehouse is heading and he maybe there for his vast retail experience but I don't think fresh blood on the board like this is an accidental appointment apart from his resume.

Van Arkel's links to Woolworths are strong and as that company is a 10% shareholder of the company his connections here are significant. With Charlies, as chairman, he has recently presided over two big deals to get Charlies products onto Woolworth's shelves in Australia and in the stores of competitor Coles, owned by retail giant, Wesfarmers Ltd [WES.ASX]

With Restaurant Brands, under his time there, the company has transformed itself from a dog into a flourishing peacock in terms of performance and customer service. Van Arkel seems to be the goto guy if you want a director to lead to the way to better performance in retail.

He appears to be behind the brand change image of Postie Plus Group [PPG.NZX] which sadly, thus far, has failed to gain much traction or indeed profit.

His reputation as a retail "Mr Fix It" appears not to be a coincidence as The Warehouse is currently stagnating in terms of sales and profit and the introduction of such a director with such strong ties to retail in this part of the world is a significant move if Van Arkel's past has anything to go by.

While Van Arkel's appointment is not a clear sign that The Warehouse is back on the block, what is crystal clear is that his place with the company as an independent director means some significant change for the company in the months and years ahead.

His inclusion on the board does make a sale more likely because of his past track record but it is not a given.

Disclosure: I own WHS shares in the Share Investor Portfolio

The Warehouse Group @ Share InvestorWoolworths puts The Warehouse back on the shopping block
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

Warehouse Group Ltd: 2010 Full Year Profit Analysis
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


 
c Share Investor 2011

The Warehouse Group Ltd: Takeover Prospect looking good on paper

The spectre of The Warehouse Group Ltd [WHS.NZX] being taken over by either Foodstuffs or Woolworths Ltd [WOW.ASX] has been hanging over the company since the two companies each took a 10% stake in 2007.

Since I last discussed this topic back in September 2009, The Warehouse has consolidated their businesses by cutting their Extra Stores with their offering of a wide range of grocery items and managed themselves into a position where cashflow has risen to a stage where they are able to pay substantially higher dividends.

Profit and sales have remained more or less stagnant but the company is poised to increase sales should the bleak economy show signs of life.

The company is in good health.

Where are we now though in terms of a possible takeover?

Woolworths applied for leave to appeal to the Supreme Court in August 2008 after a Court of Appeal decision went against them and Foodstuffs but Woolworths withdrew its application following the announcement by The Warehouse that it was withdrawing from Extra.

Since then investors have been left in limbo and even I don't understand the reason for the Court of Appeal and subsequently the Commerce Commission making a decision that prevented either party from making a takeover bid - the existence of The Warehouse extra format stores - now being removed allows either party to make a bid.

Either way nothing has been forthcoming but with a low share-price, a better looking balance sheet, low borrowing costs for any potential bid the sentiment is looking better for either party to cast the first stone.


Disclosure: I own WHS shares in the Share Investor Portfolio

The Warehouse Group @ Share Investor

VIDEO: Extended Ian Morrice Interview
Share Investor Q & A: Warehouse Group CEO Ian Morrice

Warehouse Group Ltd: 2010 Full Year Profit Analysis
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


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