KEY POINTS:
The Warehouse founder Stephen Tindall may relaunch his bid to buy back the Red Sheds after a court decision to prevent the supermarkets from initiating takeover bids.
The Court of Appeal's move to overturn the High Court judgment clearing suitors Woolworths and Foodstuffs to acquire the country's largest
listed retailer means Tindall could resurrect plans to take back the business he started 26 years ago.
Tindall, who already controls 53 per cent of the company, announced plans on September 14, 2006 to reprivatise the group in order to pursue ambitious plans to spread super-stores offering a total retailing mix including groceries and general merchandising.
Back then he and Australian private-equity firm Pacific Equity Partners were offering shareholders $5.75 a share - representing just a 12.5 per cent premium on the $5.11 closing price on the day.
Weeks later he was trumped by Woolworths, which swooped on a 10.1 per cent stake at $6.50 a share.
But market experts say yesterday's development could see Tindall's grand plan back on the table.
Tindall and PEP managing director Tim Sims are understood to still hold each other in high regard, and the Red Sheds' share-price plunge yesterday to $3.22 means buying up the remaining 43 per cent becomes an entirely more attainable option.
Based on his 2006 offer premium, Tindall may need to offer only $3.62 a share, given the state of the markets.
Deutsche Bank analyst Kristan Walker said Tindall and PEP could well make an offer for the 20 per cent held by the two supermarket players.
"It could be quite an opportune time for Stephen Tindall to come out with a privatisation plan and literally offer something on the table and take the stock off their hands - that's an extra 20 per cent that sits alongside his 50-odd per cent, and then it's not so much of stretch to get to the compulsory acquirement level."
But he cautioned that a private-equity investor would also be contemplating its exit strategy.
With the two major players Foodstuffs and Woolworths unlikely candidates for a trade sale, the offer price now would have to factor in an attractive rate of return.
"It comes down to price now."
Market commentator Arthur Lim said funding such a move would not be an issue, with Tindall's stakeholding and PEP among one of the most cashed-up private-equity funds around.
"The ability to source funding might not be as readily accessible as before, but a 53 per cent shareholding accounts for a lot of underlying equity."
Lim said there was nothing stopping Tindall going ahead with another privatisation bid, but without knowing whether Foodstuffs or Woolworths would appeal such a move would be premature.
"If Stephen makes his move he would have to be comfortable that they are not going to frustrate the process."
Head of research at ABN AMRO Craigs, Mark Lister, said the potential for Tindall to revive his privatisation plans was still there, but the prospect might be even more attractive in future.
"The outlook for the domestic economy doesn't look like it's hit the bottom yet, so while it's at the low point, it still could go even lower," he said.
"Retail's a sector that we're still all fairly cautious of, despite things having come back a fair way.
"There's still probably going to be a tough road for retailers in the short term."
With the two court decisions going either way, Lister believed there was a fair chance the suitors could appeal.
"Either way, it sounds like that it's going to be reasonably drawn out, whether they do anything or not.
"It still could be a little while before you get a final, final resolution on what ends up happening with The Warehouse," he said.
Deutsche's Walker, who had been favouring Woolworths to be the successful bidder, believed an appeal was likely.
"I think it's going to be difficult, if not impossible, to replicate the same floor space that The Warehouse has in relation to Woolies wanting to be a major player in the general merchandise category in New Zealand.
"It really does leave little options [for Woolworths] on the table."
Woolworths and Foodstuffs were reviewing their options after the decision.
Foodstuffs managing director Tony Carter said it was difficult to comment further or make a judgment on a potential application for leave to appeal, as they had yet to see the reasoning behind the decision.
"There is a statutory 20-working-day period for an application for leave to appeal to the Supreme Court.
"We will be utilising this time to digest the Court of Appeal ruling before making any decisions."
The Commerce Commission, meanwhile, called the decision a victory for market competition and supermarket consumers.
THE STORY SO FAR
* The Warehouse has been in play since September 14, 2006, when founder Stephen Tindall revealed plans to privatise, offering $5.75 a share in partnership with Pacific Equity Partners.
* Later that month he was trumped by Woolworths, which bought a 10.1 per cent stake at $6.50 a share.
* In December 2006 Foodstuffs - already a 10 per cent owner - declared its intention to bid for The Warehouse. Foodstuffs and Woolworths applied for Commerce Commission approval to proceed.
* In late June last year the commission declined their applications.
* An appeal against that decision was heard in the Wellington High Court in October.
* On November 30 the High Court overturned the commission's decision.
* The commission applied for leave to appeal the decision and on January 31, the High Court granted it.
* The commission's appeal was heard in late April in the Appeal Court.
* On May 2, Woolworths and Foodstuffs agreed to a moratorium on bidding until 48 hours after the Court of Appeal issues its judgment.
* The Court of Appeal yesterday overturned the High Court decision, preventing Woolworths or Foodstuffs from launching takeover bids.
