Tuesday, October 19, 2010

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

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

A Perfect Gentleman: The Sir Wilson Whineray Story

A Perfect Gentleman: The Sir Wilson Whineray Story

c Share Investor 2010

No comments:

Post a Comment

Comment on Share Investor Stuff