KEY POINTS:
Shares in takeover target The Warehouse surged yesterday as its Court of Appeal hearing got under way in Wellington.
The hearing, which is expected to last three days, will determine the success of the Commerce Commission's appeal to overturn the High Court judgment granting clearance for Foodstuffs and Woolworths to bid to take over the country's largest listed retailer.
The appeal covers commercially sensitive material and, like the High Court hearing, much of it is expected to take place behind closed doors.
Yesterday Warehouse chief executive Ian Morrice was called on to give evidence and the media were immediately asked to leave.
Red Shed shares opened yesterday 6c higher than their $5.70 Thursday close, and by the end of the day had risen 30c, or 5.3 per cent, on medium to heavy trading volumes to close at $6.
The rise helped boost the benchmark NZX-50 index 25.82 points, or 0.71 per cent, to 3642.63.
Macquarie Equities investment director Arthur Lim attributed the renewed interest to the resumption of court proceedings, which had sparked coverage over the weekend among New Zealand and Australian business media.
The Australian Financial Review carried a story stating that market favourite Woolworths was reviewing its original $7.15 a share proposal following a steep fall in retailer earnings multiples and a downturn in New Zealand retail spending.
Lim said Woolworths' reported stance was not unexpected.
"You would expect them to say that, wouldn't you?
"That's the way the game gets played. Anybody who's ever been in the market knows one thing, which is that the first bid, if and when it comes through, is never the last bid and the final bid."
Macquarie's valuation of an asking price of between $7.50 and $8.50 still stood, he said.
"If you look at the value of The Warehouse to Woolworths, it is a very, very strategic asset, and there is only one [of its kind]."additional reporting
- NZPA
