Liquor and grocery retailer Metcash has suffered a setback in its A$850 million ($927 million) bid for the Australian owner of the Woolworths, Foodtown and Countdown supermarkets after a corporate governance adviser cast doubt on the deal.
The Australian Financial Review reported yesterday that adviser group Corporate Governance International had
urged Foodland shareholders to reject two-thirds of the resolutions needed for the cash and shares takeover to proceed.
Metcash proposes spinning off its New Zealand operation into a company listed on the Australian Stock Exchange should the deal proceed.
Among concerns raised by CGI are resolutions covering Metcash receiving financial assistance for the bid from a new Australian company, Newco, in exchange for shares in Metcash and Metcash's South African parent, Metoz Holdings.
Metcash needs approval from shareholders to amend its constitution for it to be able to offer shares to Foodland investors.
If any of the resolutions are blocked at its planned meeting on January 20, this could prevent the complex takeover from proceeding.
When Metcash disclosed its takeover offer early last month, speculation spread through the market that major retail concerns such as Coles Myer or Woolworths might be interested in buying the profitable New Zealand assets.
But no offers have been made public and full details of Metcash's takeover offer are yet to materialise.
* A wet summer has played havoc with the Christmas selling plans of clothing retailers but the Retail Association claims stores have not resorted to heavy discounting to make up lost ground.
Data from Paymark Eftpos, which handles 80 per cent of electronic financial transactions in New Zealand, shows sales in the first week of the year have been buoyant.
New Year's Eve sales were up 10 per cent and sales on January 1-2 were up 3.4 per cent. That followed a solid December for the retail sector, despite poor sales from businesses sensitive to seasonal conditions.
Nearly $3.2 billion in transactions went through Paymark's Eftpos network last month, up 9.7 per cent on December 2003.
Barry Hellberg, of the Retailers Association, said New Year discounting was no more aggressive than in previous years.
