Thursday, July 31, 2008

Warehouse decision a loser for all

Discuss this company at the Share Investor Forum

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

Share Investor Forum-Discuss this topic

Related Links

The Warehouse Financial Data

Related Amazon reading

How Walmart Is Destroying America And The World: And What You Can Do About It

How Walmart Is Destroying America And The World: And What You Can Do About It by Bill Quinn
Buy new: $8.76 / Used from: $0.73
Usually ships in 24 hours

c Share Investor 2008 & 2009

No comments:

Post a Comment

Comment on Share Investor Stuff