KEY POINTS:
Woolworths Australia and Foodstuffs New Zealand are already preparing to make bids for the Warehouse Group without waiting to see whether the Commerce Commission will try to stop them.
The High Court last week overturned a Commerce Commission ban on the grocery giants buying the Red Sheds - having decided their taking 100 per cent of the company would not substantially lessen competition.
The decision has reopened the bidding war between the two grocery giants, which between them control 96 per cent of the grocery market.
But any sale process could be further delayed if the Commerce Commission seeks to appeal, and even longer if leave to appeal is granted.
It is unlikely any formal bids will be lodged until it has made its decisions, but both parties are confident and want to be ready to move quickly.
Warehouse Group chairman Keith Smith declined to comment about approaches regarding a potential bid.
But Woolworths indicated on Thursday that it was talking to the Warehouse Group.
And Foodstuffs chief executive Tony Carter confirmed yesterday that the company was talking to parties.
"We have had lots of discussion with lots of people," Carter said.
Foodstuffs' approach includes the Australian private equity company Pacific Equity Partners and any proposal is likely to be built around a scheme of arrangement rather than a formal takeover, it is understood.
Under that scenario the majority shareholder, Stephen Tindall, would probably remain involved with the company.
Effectively a privatisation of the company, the biggest barrier would be a more generous offer for shares from Woolworths - which has deeper pockets.
Macquarie Investments has suggested Woolworths could afford to bid up to $8.50 a share for the company.
The Foodstuffs-PEP approach is believed to be based on PEP's cash coupled with Foodstuffs' expertise.
It would see the company developing Pak 'N Save stores - which have a much stronger brand than Warehouse Extra - and the dynamics of Foodstuffs' grocery operation, it is understood.
Such a proposal that would eat into Woolworths' market share.
Speaking after the company annual meeting last week, Warehouse founder Stephen Tindall - whose interests control 53 per cent of Warehouse Group shares - said he had spoken to PEP but told the managing director, Tim Sims, they would talk again when the Commerce Commission stance was clear.
A source close to the deal said that Woolworths, The Warehouse and Foodstuffs and PEP would "naturally" want to discuss options now that the ban had been lifted.
Warehouse Group share prices have continued to rise since the High Court removed the ban. They closed at $6.15 on November 29, before the High Court decision, and closed yesterday at $6.64, up 10c.
Shop talk
* Woolworths Australia owns Woolworths, Foodtown and Countdown supermarkets.
* Foodstuffs co-operatives own Pak 'N Save, New World and Four Square.
* Warehouse Group plans to develop the Warehouse Group grocery offering, competing with their duopoly, which led to both companies taking a 10 per cent stake.
* Stephen Tindall, who controls 53 per cent of shares, will decide who wins.
* The Warehouse Group owns 85 Red Sheds.
* The Commerce Commission tried to ban the two grocery giants buying the Red Sheds.
* The High Court last week overturned the ban and and reopened a bidding war.
* A bid by Woolworths is expected to be built around a high price.
* A Foodstuffs PEP bid would put Pak 'N Saves into Red Sheds rather than Warehouse Extra, it is understood.
