The Warehouse set for a turbulent 2008

The Warehouse Group Ltd
(WHS.NZ: Quote, Profile, Research)

NZX 2008 Interim Result - NZX
HY Profit up 7% - Reuters
Warehouse profit rises 7% on warranties - Bloomberg

More Consumer Goods and Retail

eBay's Meg Whitman to co-chair McCain's campaign

China's Hisense group sees sales doubling by 2010

Japan car makers changing N. America plans - Nikkei

TABLE-China's Jiangling Motors 2007 net up 21 pct

More Consumer Goods and Retail News...

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
Buy new: $10.20 / Used from: $8.50
Usually ships in 24 hours


c Share Investor 2008 & 2009

STUFF.co.nz: Auckland Airport all go for sale

LATEST: Shareholders have voted in favour of the $1.8 billion partial takeover of Auckland International Airport by a Canadian state pension fund.

By the close of the offer at 5pm yesterday, shareholders holding 79.7 percent of the company had voted on the bid, with 57.7 percent of those voting approving the offer, the airport said today.

A majority of shareholders voting needed to back the offer for it to go ahead.

Share acceptances had reached 62.4 per cent by 5pm yesterday when the bid closed. On Wednesday they had been at 37.8 per cent.

Six per cent shareholder Guardians of the New Zealand Superannuation Fund was among those accepting.

As shareholders swung in behind the bid, the focus has switched to whether the Government will approve the deal, after the Canadian Pension Plan Investment Board's concession over its $3.60a-share offer for a 40 per cent stake in the airport company.

It is a swift turnaround for a bid that looked dead in the water only a week ago after the Government closed a tax loophole and tightened foreign investment rules.

A turning point came on Tuesday when 3.3 per cent shareholder and utilities investor Infratil, seen as a barometer of sentiment, said it would sell.

Shares in the airport, a top-10 company that controls 70 per cent of New Zealand's international air traffic, jumped 35 cents yesterday to end at $2.54.

In addition to gaining 40 per cent of shares, the Canadian fund needed to gain approval from a majority of voting shareholders.

The harshest blow to the bid came on March 4, when Auckland Airport shares plunged 20 per cent after the Government said it would tighten rules to prevent overseas investors gaining control of so-called sensitive assets.

That followed a February 26 move preventing companies from offering tax-deductible payments.

This had formed a key part of a capital restructuring proposal by the pension fund if its partial bid succeeds.

However, this week the Canadian pension fund said it would voluntarily restrict its voting rights to 24.9 per cent in a bid to calm Government worries about foreign ownership of key assets.

The Government's move was seen by many as politically motivated.

One analyst said: "The Government doesn't give a damn about the economic ramifications, this is all about getting votes."

The Overseas Investment Office said it would refer the bid to Land Information Minister David Parker and Associate Finance Minister Clayton Cosgrove.

- with REUTERS

Share Investor AIA merger coverage to date

Auckland Airport Update
Latest AIA developments
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

c Share Investor 2008

Auckland Airport merger update

The Battle for the Airport

The ongoing debate over ownership of Auckland
International Airport, the gateway to New Zealand. More
Auckland City Council vote against AIA sale - Sydney Morning Herald
Canadians near bid for AIA - Stuff.co.nz
Infratil: Morrison played no part in AIA share decision-NBR
Infratil says yes to Canadians - Stuff.co.nz
Fran O'Sullivan: Canadians losing their bite - NZ Herald


The CPPIB will get the 40% of acceptances by 5.00pm Thursday(NZ time) But the
Labour government look set to stop the deal anyway.


There have been further developments in the Auckland International Airport(AIA) merger saga today.

Since the last report here though, Infratil, a 3% holder has decided to approve the merger and as of today, after market closing at 5.00pm, The Canadian Pension Plan Investment Board has 38.7% acceptances and its a gnats whisker away from the required 39.53% needed by tomorrow.

Although largely immaterial, given the overwhelming acceptances already, Auckland City Council has voted just 30 mins ago(8.20pm NZ time) not to sell their 12.7% stake and vote against the merger going ahead.

Clearly the move last week by Micheal Cullen to retrospectively stop the deal by changing a law has backfired on him and CPPIB will pass the acceptance mark with flying colours.

Cullen will likely stop the deal anyway he can because he thinks there are votes to be had, so the positive outcome for the Canadians is going to end ultimately end in tears for them.


Share Investor AIA merger coverage to date


Latest AIA developments
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disc: I own AIA shares



c Share Investor 2008

McDonalds Playing Chicken with KFC

McDonald's is going to take on KFC at their own game and the head of Restaurant Brands Ltd [RBD.NZX] replies to the war cry of MD of McDonald's Mark Hawthorne:

Chief operating officer Rod de Vries said sales had increased 9 per cent in the past year - an outstanding result in a highly competitive market. "It is therefore no great surprise that our competitors will try for the same success in our market and challenge our menu offering.

"However, we are confident that KFC will continue to hold the recipe for success in our industry and that consumers will continue to love the secret blend of 11 herbs & spices that Colonel Sanders perfected in 1939.

Full NZ Herald Story

A very logical and understandable reply from the head of Restaurant Brands, in reply to news out today that McDonald's New Zealand is going head to head with KFC to try and knock the Colonel of his lonely perch.

KFC have to respond to the superior marketing and
service levels of McDonald's to keep their chicken market
share.

As Warren Buffett says, he looks for companies with a "moat", that is, a unique product or company that has high barriers to entry and therefore stable and sustainable cash flows. KFC is certainly that. Nobody else has ever managed to get the 11 secret herbs and spices down pat and nor are they likely to and that is the main advantage that KFC has.

The uniqueness of their taste is their secret to their 69 year old history.

Unfortunately for KFC in New Zealand we have heard this all before from Restaurant Brands, "we will take competition seriously" blah, blah. Witness the Pizza Hut meltdown after competition has decimated that brand. I still think RBD management underestimate their rivals and over rely on the strength of the KFC product when going head to head.

McDonald's Vs RBD, I will pick Maccas every time, because management there are smart and know all about service, imagine what they would do at KFC.



KFC's chicken dominance is going to be severely tested by the McDonald's
competition but KFC have a unique product that loyal customers love.


McDonald's are going for an all out assault on KFC's dominance and are going for quality and range in their chicken offerings. Breast meat and real chicken will be the order of the day. They will take market share off KFC, that is clear. How much market share is up to how RBD management react to the competition.

RBD have a great product but where Maccas will beat them is at service and marketing and that is half the battle.

In the USA and Australia this battle has been fought and lost by KFC and the Big Mac has intentions to be no1 here within 3 years, so history could be repeated here.

The McDonald's saturation advertising has already started. It will be interesting to see what the RBD response will be.

Keep up to date with this development at the Share Investor Blog .


Restaurant Brands @ Share Investor

RBD - 2011 Half Year Result
RBD - 2010 Quarter one sales
RBD - 2010 Quarter two sales


Restaurant Brands share price looking overcooked
Most Outstanding Stock of 2010: Restaurant Brands Ltd
Restaurant Brands Ltd: KFC has finally cracked it
Restaurant Brands: KFC Sales Figures Explained - Part 2
Finger Lick'n Good Management
Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Discuss RBD @ Share Investor Forum
Download RBD company reports




c Share Investor 2008