KEY POINTS:
Share values for The Warehouse Group dived and then soared yesterday as investors realised a High Court decision sending the long-running sale process back to court may speed up the sale.
The High Court gave the Commerce Commission leave to appeal its own earlier judgment which had overturned
a commission ban on Woolworths and Foodstuffs buying the Red Sheds.
On news of the decision, shares tumbled by as much as 3.5 per cent but rose again and Red Sheds closed at $5.65, up 10c on the day.
Market experts said the decision had been widely expected and ought to have been priced in to the stock.
More surprising to the market were comments from Judge Jill Mallon, who in allowing an appeal of her own decision refused the commission more time for the case to be heard.
She said she was granting permission on the basis that it be heard urgently and that Woolworths and Foodstuffs could not begin any takeover bid until the end of February. As a result the appeal is likely to be heard this month.
Potential bidders - Woolworths Australia and Foodstuffs New Zealand - now face the possibility there could be a for sale sign up at the Red Sheds by April or May.
"That is possible," said Foodstuffs chief executive Tony Carter. "It was very clearly a hurry up call to the commission after all the delays that they have caused this process," said Arthur Lim, investment director for Macquarie Equities.
"It appeared that the judge was saying that if the commission has a valid case they should not be dragging it out."
Investors have been critical of the commission opposition and delays which prevent a sale and seek to remove the two most likely buyers, damaging the prospect for a profit from any takeover.
The commission had wanted the appeal to be held in April saying that it needed more time to prepare its case.
But Woolworths' counsel David Goddard argued in the hearing on Tuesday the public interest was not enough of a factor to take into account for a hearing in April, rather than this month. Woolworths said the court also needed to take into account money shareholders would lose for every month there was a delay in the decision, and market uncertainty for employees, Goddard said.
Counsel for Foodstuffs and The Warehouse said they would be ready for a February hearing.
Lim said that both parties were poised to make an offer for the company and once court proceedings had resumed - the market assumes against the commission - the sale would proceed quickly.
Foodstuffs group chief executive Tony Carter confirmed that the company had held talks with several parties in the interim period.
Carter agreed a sale might be able to proceed by April or May.