Grocer drops legal battle

Woolworths is dropping its legal battle to get clearance to bid for The Warehouse following the Red Sheds' move to abandon the Extra grocery retailing format.

But the Australian retail giant is not saying if it will reapply to the Commerce Commission for consent to launch a takeover bid - despite being of the view that there were "no relevant competition issues impacting a potential acquisition of The Warehouse".

It announced its decision yesterday, citing the "fundamental change" in market characteristics since the Commerce Commission's June 2007 decision blocking any takeover moves by Woolworths and rival supermarket operator Foodstuffs.