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Supermarket operator Foodstuffs is refusing to comment on speculation that it is considering joining a consortium that includes Stephen Tindall to buy The Warehouse.
The owner of New World, Pak'n' Save and Four Square supermarkets applied to the Commerce Commission just before Christmas to buy all of The Warehouse. The application does not mean there will be a formal bid.
Many analysts do not think Foodstuffs, a co-operative run separately in three regions, has the firepower to take over The Warehouse, which has a market value of $2.2 billion.
That has sparked speculation that Foodstuffs wants to join with Private Equity Partners (PEP) - the private equity investor that Tindall teamed up with in a stillborn bid to take The Warehouse private this year - as well as Tindall and the Tindall Foundation to make a bid.
Foodstuffs managing director Tony Carter yesterday would not rule out the idea of a consortium with Tindall.
Carter said Tindall was a major shareholder and "you could expect that he would talk to other major shareholders like Foodstuffs.
"Those discussions, of course, are confidential. There is no deal, no agreement and we are not ruling anything in or out."
Tindall did not return calls.
The Tindall bid to take the company private was not formally made as Australian retailer Woolworths moved to take a 10 per cent blocking stake. Foodstuffs also has a 10 per cent stake. Tindall, family interests and the Tindall Foundation together own 51 per cent of the company.
A New Zealand retailing giant could be created if Tindall and Foodstuffs joined in a consortium with PEP. It would have huge buying power and could make savings in logistics. That would allow Tindall to stay involved with the retailer he created and move into food in partnership with the country's most successful supermarket operator rather than in competition with it.
Foodstuffs would not have to raise money for a bid and PEP would get an investment in successful retailers.
Under such a scenario the Tindall Foundation would be weighing up an equity holding in a business going forward against any cash offers.
When Tindall announced an intention to take the company wholly private at $5.75 a share, the foundation had a choice between his cash offer and potential cash offers from either Woolworths or Foodstuffs.
The alternative is that Woolworths bids so high that Tindall and the foundation sells to them.
Any bid by the consortium would start with a 60 per cent holding and have to be higher than the $6.50 Woolworths paid for shares.
Analysts said Woolworths would be the more likely winner in any bidding war because it had deeper pockets than Foodstuffs and could generate greater cost savings.
Tindall would have to weigh his options for taking cash out of the business, minority shareholder issues and assess the likelihood of bids from the blocking shareholders.
Citigroup said The Warehouse shares could be worth up to $7.50 each, valuing the company at about $2.4 billion.
The shares closed at $7.20 yesterday.
- NZPA
