Foodstuffs close to 10pc Warehouse target

Foodstuffs' raid on The Warehouse continued yesterday, boosting its stake in the discount retailer to over 8 per cent.

The co-operative - owner of the Pak'n'Save, New World and Four Square chains - has now spent $126 million on shares in The Warehouse since launching its surprise stand in the market for 10 per cent of the company on June 7.

At $5 a share, Foodstuffs' offer last month sent the share price up more than 30 per cent, but the result was only 5.6 per cent of the company.

However, it has since bought small parcels at prices ranging from $4.84 to $5 a share, and by yesterday it had 8.3 per cent.

Shares in The Warehouse closed down 2c at $4.93 last night, topping NZX trading with turnover of 10.6 million shares.

Foodstuffs managing director Tony Carter was unavailable for comment yesterday, but has previously called its investment in The Warehouse a "passive stake".

Last week he said he doubted Foodstuffs had the financial firepower to make a full takeover which, at $5 a share, would amount to $1.5 billion.

"It's not our intention at this point to make a full takeover and, to be honest, it would be a stretch," Carter said.

Foodstuffs is New Zealand's largest supermarket group, made up of three regional co-operatives in Auckland, Wellington and Christchurch.

Its move on The Warehouse has been seen as a move to protect its 57 per cent share of the $10 billion grocery market.

A 10 per cent stake would give Foodstuffs enough to block a long-rumoured takeover of The Warehouse by giants such as Woolworths, Britain's Tesco or Wal-Mart of the United States.

Foodstuffs could also use this blocking stake to negotiate some form of co-operation as The Warehouse expands into groceries.

The discount retailer last month opened its first hypermarket with a full grocery, pharmacy, liquor, bakery and general merchandise offering - at the new Sylvia Park shopping centre in Mt Wellington.

Warehouse founder Stephen Tindall controls just over 51 per cent of the company on his own account and through shares held by the Tindall charitable foundation and has said he would not sell.