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The Warehouse has been exploring an expansion into groceries since at least 2004, when it ran a rule over Progressive Enterprises, operator of the Countdown, Foodtown and Woolworths chains, sources say.
The New Zealand retailer considered itself a serious bidder for Progressive, which was put up for sale by its Australian parent Foodland Associated as a defence against a hostile takeover bid. But The Warehouse bailed out of the bidding when it realised it was up against the eventual winner, Woolworths. Woolworths bought Progressive in a A$2.5 billion ($2.9 billion) deal in May 2005.
The Warehouse's ambitions then are in sharp contrast to founder Stephen Tindall's vision for the company now.
He last week acknowledged he may sell his 27 per cent stake and said he would be considering his options over the next six months. And if Tindall sells, his charitable Tindall Foundation, which owns 21.7 per cent and family interests with another 4 per cent would likely follow suit.
In a twist of fate, Woolworths Australia, which has a 10.1 per cent stake, has been touted as the most likely buyer. Woolworths also last week confirmed its continued interest in The Warehouse and the New Zealand general goods market.
The outside contender is the New Zealand co-operative Foodstuffs, which also owns 10 per cent.
Tindall last week acknowledged for the first time that his company - now worth $2.1 billion - may go on without him.
He said: "Clearly there is an emotional investment in The Warehouse, when you start it and when it has been there for 24 years.
"It may be the case like, if you've reared a child you want to make sure going forward that it is in the right hands, whether that includes you or not."
Up until late September, Tindall sought to privatise the company with Australia's Pacific Equity Partners. But he was forced to withdraw after Woolworths bought its stake at $6.50 a share - well above the $5.75 a share Tindall planned to offer.
Many investors now believe that Woolworths will come back with a higher bid to take out Tindall, although in Sydney last week Woolworths chairman James Strong said it did not anticipate any immediate further steps under the current conditions.
