KEY POINTS:
Sale of the Warehouse Group looks set to be on hold well into 2008 as its board of directors throws its weight behind potential buyers - Woolworths Australia and Foodstuffs New Zealand.
Buddle Findlay competition lawyer Tony Dellow said he was surprised that the Commerce Commission had decided to appeal the case, but he thought that on past decisions the commission would likely win leave to appeal.
There was potential for the case to move through jurisdictions from the High Court to the Court of Appeal to the Supreme Court - but the terms would become more limited as the case progressed.
He said the commission would have a difficult challenge overturning the High Court decision.
The commission says a sale would lessen competition for consumers while the market wants a sale because shareholders will profit from a takeover offer.
Both supermarket retailers have 10 per cent stakes in the Red Sheds and are lined up to bid for the company, so the value of shares shifts as it appears more or less likely that it can be sold.
There was a dramatic fall on Tuesday when the commission said it planned to prevent a sale, with shares tumbling 73c.
Shares in the company rose 6c yesterday to close at $5.53, despite the commission winning an interim ban on Woolworths and Foodstuffs launching a bid before its appeal begins.
If the commission wins its appeal it would mean that two of the most likely suitors for The Warehouse would be prevented from bidding.
The Court of Appeal is due to sit on January 29 to decide whether leave to appeal will be granted.
On Tuesday, Warehouse Group chairman Keith Smith said. "The board was concerned following the commission's decision to appeal. The board is of the view that should the application for appeal be granted, a further lengthy period of uncertainty is likely to result, which is not in the best interests of the business, employees or shareholders."
ABN Amro retail analyst Carolyn Holmes this week described The Warehouse opposition to a commission appeal as "a bold move". She said the move spoke volumes as to the direction The Warehouse board "wanted to see this saga played out". But Smith declined to comment on whether it signalled the board backed a sale.
