Tindall's back-off may not be finale

Stephen Tindall

Stephen Tindall has not given up his ambitions to take greater control of The Warehouse, despite yesterday formally abandoning the full takeover bid he announced last month.

Sources close to the Tindall camp said he was still involved with Australia's Pacific Equity Partners, and they were still working on approaches that would give Tindall greater control of the retailing company he founded.

"The announcement [yesterday] was to clear the way and make it known that the earlier proposal was off the table," said a source familiar with the situation.

"It would be fair to say there have been and are now a lot of discussions involving a number of parties."

Another source said discussions also involved people who were not already shareholders, but declined to name them.

On September 27 Woolworths Australia took a 10 per cent stake in the company, joining Foodstuffs on the share register, which also has a 10 per cent stake. Each has the capability to blocked a formal takeover by Tindall.

Tindall - who owns 27 per cent of The Warehouse - could in theory still take over the company using a merger structure, but this would be difficult as he would have to win 75 per cent of the shares.

One well-placed source described the present situation with Tindall flanked by Woolworths on one side and Foodstuffs on the other as being "a Mexican standoff with nobody holding a gun".

It is understood Woolworths is seen as the more problematical shareholder given its resources and its ability to launch another lightning raid on the the 29 per cent of shares not controlled by Tindall, the Tindall Foundation, Woolworths or Foodstuffs.

As a co-operative, Foodstuffs has limited options to launch another share raid, but any move by Tindall to form a closer relationship with Foodstuffs would risk a Woolworths raid to halt that.

Foodstuffs New Zealand chief executive Tony Carter welcomed the statement as clearing the old offer off the table.

He said if Tindall sought discussion with Foodstuffs there were clear synergies between Foodstuffs and the Warehouse that could be explored.

Although Tindall has avoided publicly expressing any preference for forming a relationship with either grocery operator, a source close to his camp said he had shown no interest in forming closer links with Woolworths.

Tindall said yesterday that he "would not be submitting an offer for shares to The Warehouse on the terms as announced on September 14". These amounted to a basic $5.75 cash offer with about one-seventh of shareholders able to access around $100 million in tax credits. But the offer - which valued the company at $1.8 billion - was largely incomplete and some brokers said the tax credits proposal were in a grey area legally.

Tindall said the circumstances had changed "and in particular there had been a significant change in the shareholding in The Warehouse and that had contributed to markedly higher share price". Woolworths picked up most of its shares for $6.50 and since September 27 the share price has hovered about that. Yesterday the share price dropped 8c to close at $6.44.

Meanwhile, Rickey Ward of Tyndall Investments said there had been signs that The Warehouse might consider the status of the $100 million in tax credits, but would not elaborate.

Tyndall Investments holds less than 5 per cent of The Warehouse shares and stands to benefit from any offer of tax credits. But Ward and some other shareholders have raised an eyebrow at the earlier Tindall plan to distribute the credits as part of the privatisation.

Raising stakes

* April 2005: Woolworths buys Progressive Enterprises from Foodland.

* July 5, 2006: Foodstuffs gains a 10.1 per cent share of The Warehouse, mostly through a $5-a-share offer.

* September 14, 2006: Stephen Tindall reveals a plan to privatise The Warehouse. It is built on a cash offer of $5.75 a share with Pacific Equity Partners.

* September 27, 2006: Woolworths buys 10.1 per cent of The Warehouse, mostly through an overnight raid, with a cash offer of $6.50 a share.

* September 29, 2006: Tindall goes on holiday, saying he is considering his next move.

* October 30, 2006: Tindall formally abandons his original takeover proposal.