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The Warehouse founder Stephen Tindall was on the phone to Pacific Equity Partners' managing director, Tim Sims, within hours of Thursday's High Court decision that freed him to buy or sell the Red Sheds.
The court had overturned the Commerce Commission's decision to refuse clearance to Woolworths Australia
and Foodstuffs to buy The Warehouse and had put the $1.9 billion retail giant back on the block.
Pacific Equity (PEP) is the private equity group which partnered Tindall to put The Warehouse in play last year.
So, what did he talk about with Sims?
"It was just about the High Court decision. We decided that maybe we can have a chat some time and if the Commerce Commission appeals the decision then maybe we have to delay that chat."
PEP is a high-profile company active in the Australian retail sector which has recently raised $4 billion for acquisitions.
"I know as well as you do that they have a lot of money. We will have to wait to see whether they come knocking," he said, speaking yesterday after The Warehouse Group's annual meeting at the Ellerslie Racecourse.
At the meeting - which marked 25 years since he opened the first Warehouse store in Wairau Rd on the North Shore - Tindall only briefly mentioned sale negotiations. He said he would act in the interests of shareholders and consumers.
None of the shareholders doubted him and, astonishingly, there were no questions from the floor.
After the meeting he confirmed Thursday's chat with PEP but played it down.
When the status of the company is finally free from potential appeals - the commission has yet to decide whether it will seek leave to appeal - Tindall said he would talk to anyone who was interested in the company.
But as the race resumes for control of the The Warehouse Group, it is still not clear who Tindall backs - Woolworths Australia or Foodstuffs New Zealand.
Indeed it is not clear whether he himself may yet be back in the race alongside Foodstuffs and PEP. Tindall, with family interests, controls 53 per cent of the The Warehouse.
He did not speak with Woolworths chief executive Michael Luscombe on Thursday - which may be just because Woolworths never called. But it is understood that PEP was one of "several" parties that Foodstuffs chief executive Tony Carter spoke with after the court decision.
So, is Tindall a buyer or a seller?
PEP was Tindall's partner for his abortive bid to privatise The Warehouse Group in September last year built around an offer of $5.75 a share.
That offer was blown out of the water soon after when Woolworths paid $6.50 a share and
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Tindall back in the game
Caption1: WARNING: Warehouse chairman Keith Smith told the AGM the company expected its 2008 annual profit to be lower than 2007's. PICTURE / MARTIN SYKES
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joined Foodstuffs with a 10 per cent share of the company.
Now as the market tries to guess Tindall's next move, there is debate about where he stands and whether a combined Foodstuffs, PEP and Tindall bid could ever beat Woolworths.
Tindall has developed a reputation as a big promoter for New Zealand initiatives and entrepreneurship. One former colleague said that if he was ever faced with equal offers from an Australian and New Zealand bidder - such as Woolworths or Foodstuffs - Tindall would almost certainly choose the New Zealand company.
Woolworths has made it clear that it is keen to buy The Warehouse Group and, with estimates of $120 million in synergies and the value of obtaining dominance of the general goods market in one fell swoop, Woolworths could make a big offer.
The company paid $6.50 a share to obtain its 10 per cent stake and Macquarie Equities has suggested The Warehouse shares might ultimately be worth more than $8 for Woolworths.
The share price yesterday closed up 6c at $6.21. It was trading at just $4.99 at market close on Wednesday.
Even if Tindall is pro-Kiwi, he has a reputation as a tough and sharp businessman. As he has said before - selling up The Warehouse might allow him to invest in other New Zealand businesses.
A former colleague said it would depend on where Woolworths pitched its price and how susceptible Tindall was to the pro-New Zealand agenda. "How big is the price factor before the businessman and the New Zealander are different?"
Arthur Lim of Macquarie Equities says that Woolworths has the advantage of being able to move quickly.
As a co-operative the capital structure for Foodstuffs limited the amount it could raise for any equity deal.
Foodstuffs chief executive Tony Carter insists there are no barriers to raising capital.
Market sources say it is well known that Foodstuffs was having deep discussions with PEP before the Commerce Commission hearings and that any Warehouse bid by the food co-operative - which owns the Pak 'N Save, New World and Four Square chains - would include PEP.
Retail industry sources say PEP has the cash backing but Foodstuffs' biggest asset is its expertise in food retail, where it has 53 per cent of the market. It is expected that any joint bid by Foodstuffs and PEP - with or without Tindall backing - would be based on developing the hyperstore concept of groceries alongside general goods. In particular putting Pak 'N Save inside The Warehouse.
Good news, bad news: Shares rise, profit to fall
The Warehouse yesterday confirmed it does not expect its 2008 annual profit to be as strong as the $115.5 million it posted in 2007.
"With the key Christmas and back to school periods still to come, it is too early to provide specific earnings guidance," chairman Keith Smith said at the annual meeting yesterday.
"However, at this point we reaffirm the comments made at the time of the annual result announcement that we would not expect F08 [fiscal 2008] net profit after tax to be higher than adjusted net profit after tax achieved in F07."
Smith would not comment on Thursday's High Court decision which overturned a Commerce Commission ruling blocking rival supermarket chains Foodstuffs and Woolworths from making takeover bids.
The decision sent Warehouse shares up more than 20 per cent and they rose 6c more to $6.21 yesterday.
Smith said that the company had strong cashflow and he hinted at a capital return to shareholders.
"In the absence of any major acquisition opportunity, the company will consider undertaking further capital management initiatives in the 2008 calendar year."
- NZPA
