Warehouse shares soar after takeover speculation

Shares in The Warehouse soared yesterday on speculation that the retailer might be a takeover target for Australian grocery giant Woolworths.

Attempts by Woolworths to distance itself from the rumour did not stop Warehouse shares rising more than 5 per cent (22c) to hit $3.37 in morning trading.

They eventually settled back to close at $3.30 - up 15c for the day.

The rise was sparked by the comments of Woolworths chief executive Roger Corbett on the ABC's Sunday business programme.

Woolworths Australia is buying Foodland, which owns New Zealand supermarket chains Foodtown, Countdown and Woolworths.

Corbett said those supermarket chains would provide a beach-head for developing its general merchandise business further in New Zealand. He said he was aware of the success of The Warehouse and had assessed that.

Woolworths would "take advantage of whatever is the best way to achieve those objectives of moving into the general merchandise market when the time comes", he said.

Woolworths spokeswoman Clare Buchanan said yesterday those comments had been misinterpreted by the media. Corbett had been talking about assessing the wider New Zealand market for general merchandise - not The Warehouse itself.

But she would not categorically deny that Woolworths was eyeing The Warehouse.

A Warehouse spokeswoman said the company had no comment.

Forsyth Barr analyst Jeremy Simpson said The Warehouse would certainly be of interest to big international retail chains if its cornerstone stake was for sale.

But that was a big "if".

The Warehouse remains majority-controlled by founder Stephen Tindall. His stake is just above 50 per cent, including shares held by the Tindall Foundation.