Warehouse bid appeals

Speculation has emerged that The Warehouse could be a potential buyer for Foodland's New Zealand supermarkets.

Citigroup has released research exploring the possibility that the discount chain could swallow the far larger grocery chain, either by itself or through a joint venture.

The Warehouse has not expressed any interest but analysts are expected to question it on the possibility when it reports half-year results today.

Citigroup analysts favoured the acquisition of Foodland's NZ supermarket chains ahead of The Warehouse's strategy of developing a grocery offering within its outlets.

"These opportunities don't come around that often and must be worth considering," the analysts said.

The Warehouse has a market capitalisation of $1.3 billion, but the New Zealand assets of Foodland have been valued at up to A$2.1 billion ($2.3 billion) by Grant Samuel.

One possible scenario is The Warehouse could sell its Blue Sheds stationery division and Australian Yellow Sheds to offset the buy. Karen Chan