Sunday, October 5, 2008

The Warehouse set to cut loose "Extra" impediment

The Warehouse Group [WHS.NZ] will make a decision mid October as to whether to ditch their "Extra" format stores, the major stumbling block for a possible sale to either Woolworths Australia [WOW.ASX] or Foodstuffs. It is looking likely that Warehouse management will cut the 3 trial stores lose.

It must also be close for a decision in the Supreme Court to grant Lawyers for Woolworths a right to appeal the Court of Appeal's ruling to deny any sale of the retail giant on the grounds that the Warehouse could be "possible competition", in the supermarket sector.

I am of the opinion though, that given the removal of the impediment of the Extra format stores, the format that the Commerce Commission said would provide supermarket competition and their main opposition to the sale, that any hearing in the Supreme Court would be swift and a decision could be made quite quickly.

That is contrary to my previous view that the Supreme Court process would be drawn out and tedious but hey the rules have now changed and therefore my original scenario I can now throw in the trash.

I wouldn't be surprised if Woolworth's lawyers made a submission to the Commerce Commission based on The Warehouse sans the Extra format.

It is worth a try, has been done before, and would certainly get the bidding process going before Christmas.

On the bidding process.

Clearly given the current credit crunch, and financial market turmoil, the bids for The Warehouse are going to be lower than they would have been since US financial system almost fell over the edge-it still hangs on a slippery precipice-so shareholders may have to carefully consider any substantially lower bids least they get shafted.

Looking forward, and of course preempting any court decision, as shareholders we should look to the longer term and reject any opportunistic bid because of any weakness in the global economy or how much we might need the money.

I am picking a green light for Woolworths or Foodstuffs to buy the big red sheds.

Disclosure: I own WHS shares

The Warehouse @ Share Investor

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

Related Links

Warehouse results

Annual Results 2008 - Audio Webcast

Audited Results for the financial year ended 27 July 2008.pdf (1MB)
Warehouse Corporate profile
2008 Interim Report -Discuss this company

Related Amazon reading

The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy

The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy by Richard Vedder
Buy new: $13.60 / Used from: $3.63
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c Share Investor 2008

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