Warehouse bidders Woolworths, Foodstuffs get court setback

By Phil Boeyen, ShareChat Business News Editor

Thursday 31st July 2008

Woolworths, Australia's biggest retailer, and its New Zealand supermarket rival Foodstuffs had their approval to bid for Warehouse Group overturned by the Court of Appeal.

The ruling stems from an appeal by the Commerce Commission against a High Court decision allowing Woolworths and Foodstuffs to make takeover bids. The regulator argued an acquisition would reduce competition.

Warehouse said it won't comment until it has studied the full judgment further. The biggest discount retailer on the NZX 50 Index has in recent years begun offering groceries in its stores and opening so-called hypermarkets. Buying the business would give the supermarket chains a lower cost way to expand than developing green-field sites.

Woolworths and Foodstuffs each own 10% of Warehouse, whose stock has dropped 33% this year amid growing evidence the economy has fallen into recession. It traded at NZ$3.82 yesterday, valuing the company at NZ$1.19 billion.

The retailer cut its profit forecast last month, saying consumer confidence and retail spending had "deteriorated markedly."

The Court of Appeal ordered Woolworths and Foodstuffs to pay costs to the regulator.

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