The battle for control of Kiwi retailer The Warehouse may be about to get serious again after being stalled last year.

The Warehouse was founded by much gonged NZ icon Stephen Tindall. He floated the company a few years back, retaining 52% for himself and associated trusts and entities. Last spring, Tindall announced that he would like the other 48% back, joining Pacific Equity Partners in offering $5.75 a share. Quick as a flash, local supermarket retailer Foodstuffs and Aussie Woolworths each bought a blocking 10% stake.

Tindall’s bid was ill prepared and a text book example of how to not to go about a privatisation. He was stymied – but so were the others. Each could prevent the other two getting their stake past the 90% required to complete a compulsory total acquisition.

Last week Foodstuffs applied for competition clearance to buy the company, and now Pacific Equity Partners are in the Foodstuffs camp. The news pushed Warehouse shares up 3% despite Christmas trading being below expectations. And on Wednesday, Woolworths made a similar application.

Tindall wanted to take the privatised company into the grocery business. Foodstuffs wants The Warehouse to give it buying mass to allow it to compete more effectively with Woolworths.

But analysts are tipping Woolworths as more likely to be the successful suitor, paying up to $7.50 a share resulting in a price tag close to $3b, and turning it into the powerhouse of NZ retail.

The NZ supermarket business is a duopoly, with Woolies being the minority player. It is pitching its bid as the white knight that would rescue Kiwis from a market dominated by Foodstuffs. But Kiwis have great difficulty in welcoming raiders from across the Tasman. Woolworths will need to do a lot more romancing of the NZ media if it is not to be painted and the wicked witch of the west.

So maybe the solution is for The Warehouse to join with Foodstuffs and some private equity to set up a joint venture freezing out those bast-rds from across the Tasman who stole the pavlova, Phar Lap and Bjelke Joh.

Peter Fray

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