31 Jul 2008

Court of Appeal blocks Warehouse takeover bids

10:20 am on 31 July 2008

The Court of Appeal has blocked Foodstuffs and Woolworths from making takeover offers for The Warehouse.

The ruling reversed an earlier High Court ruling which allowed the two supermarket groups to make bids. The Court of Appeal ordered them to pay costs to the Commerce Commission.

Shares in The Warehouse closed on Wednesday at $NZ3.82. They have lost 33% to date this year.

The Commerce Commission initially declined applications to buy The Warehouse last June, saying a substantial lessening of competition would result if either chain bought the discount retailer.

The two groups appealed and last November, the High Court found in favour of the supermarkets, so the commission took the case to the Court of Appeal.

The Court of Appeal said it would issue the reasons for its decision, once it decides what commercial information submitted by the supermarkets should remain confidential.

The Warehouse is about 50% owned by founder Stephen Tindall and associated interests. Woolworths and Foodstuffs each own about 10%.

The Commerce Commission says it's a victory for consumers and competition.

The Warehouse says it won't make any comment until it sees the court's judgement.