Grocery giants, The Warehouse and the Commerce Commission are on a knife edge. Photo / Janna Dixon
Grocery giants, The Warehouse and the Commerce Commission are on a knife edge. Photo / Janna Dixon
KEY POINTS:
Woolworths Australia and Foodstuffs have signed a truce that ensures they do not make a pre-emptive bid for the Warehouse Group.
All three parties agreed yesterday they would not go ahead with any advance takeover of the Warehouse Group despite the prospect of getting the all-clear on Monday.
The bidders appeared to have takeover jitters with the prospect that any bid could add to the 17 months of legal rows that surround the Red Sheds sale process.
When Justice Jillian Mallon of the High Court granted the Commerce Commission leave to appeal an earlier ruling - which had been in favour of the bidders - she also imposed a moratorium on either potential bidder buying shares before the end of February.
Woolworths and Foodstuffs have now agreed that clearance to buy shares will be suspended until May 1. That will prevent any bid for shares until after the hearing of the commission's case to the Court of Appeal from April 29.
The commission is trying to overturn a High Court decision that ruled against its earlier ban on the sale of the Red Sheds to either of the grocery giants.
Both parties own 10 per cent - enough to prevent a compulsory takeover.
But even if a 100 per cent bid was unlikely, the lapse of the ban might have allowed the two parties to reach 19.9 per cent and change the dynamics of any future sale.
Amid speculation of a move by either party Warehouse shares rose 14c on Monday.
The wording of the agreement between Woolworths and Foodstuffs was not spelled out in detail. But it is understood that the decision was linked to an approach being made by the commission to the Court of Appeal.
The commission had sought a later date from the High Court and had been turned down.
But faced with the complications of a bid, it is understood the commission was urgently seeking a suspension of clearance.
"The parties have agreed not to oppose that application," said an insider close to one of the bidders.
But after 17 months of to-ing and fro-ing the move illustrates the degree to which the four parties - the grocery giants, Warehouse and Commerce Commission - are poised on the knife edge of a bid and potential sale. Warehouse shares closed unchanged at $6.15 yesterday.
