Foodland considers Woolies options

The company's determination to seek a way forward for a possible purchase comes despite an announcement from Woolworths owner, Hong Kong-based Dairy Farm International, saying the chain is not for sale.

Dairy Farm issued an announcement on Thursday confirming that it intended to hold on to the New Zealand supermarket business and would not be holding further discussions with parties interested in acquiring it.

"Following the recent decision by the New Zealand Commerce Commission to block FAL's application, Dairy Farm considers that retaining the business is in the best interest of its shareholders," the company says.

"Woolworths New Zealand is a very successful and profitable business. Its continued strong performance over the last seven months, despite the uncertainties during FAL's applications for approval, reflects the talent and dedication of our Woolworths team members."

Foodland has acknowledged the Dairy Farm stance and says that Woolworths NZ has never officially been for sale.

"It has been clear throughout this lengthy process that the onus to achieve clearance from the Commerce Commission and subsequently encourage a sale lay entirely with us," FAL says.

"In view of the substantial synergies that the combined businesses could achieve FAL will continue to consider the legal avenues available to achieve the required clearance in anticipation that a successful outcome may encourage Dairy Farm International, despite their announcement, to reconsider."

FAL's bid for Woolworths was rejected by the Commerce Commission on new, stricter regulatory rules that require it to investigate whether such a takeover would substantially lessen competition in the market.

The New Zealand supermarket sector is dominated by three players - Foodstuffs, Foodland-owned Progressive Enterprises and Woolworths NZ.

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