Warehouse founder bids for bargain

Warehouse founder Stephen Tindall is trying to buy back the business he created almost 25 years ago so he can pursue a "risky" plan to spread super-stores throughout the country.

The man who built The Warehouse from scratch called a hastily organised press conference in Auckland yesterday to announce plans to privatise the company in a deal worth $1.8 billion.

"The Warehouse can grow in new directions, but we accept that this requires a significant investment and that it carries real risk," Mr Tindall said.

The company opened its first "Warehouse Extra" at Sylvia Park in June.

That "landmark" store was the beginning of a $60 million five-year plan to expand into food and general merchandise in one super-shop.

A second store will open in Whangarei by Christmas with the same shopping mix - groceries, general merchandise, liquor, pharmacy, bakery and cafe - all under one roof.

It is understood some of the other 128 Warehouse stores will also be converted into hyper-markets.

Mr Tindall said his plan would give shoppers an "improved and broadened offering".

The man who opened the first Warehouse on the North Shore in 1982 said the company's aim of "giving value to New Zealanders by lowering the cost of living" would not change.

Mr Tindall is offering shareholders $5.75 a share, a price which he says is "full and fair".

The shares closed at $5.11 last night.

He has joined forces with Australian private equity firm Pacific Equity Partners to buy the company.

The Tindall Foundation, a charitable trust set up to support community groups and not-for-profit organisations, owns 21 per cent of the Warehouse. It would be asked to sell its shares as part of the privatisation. The work of the foundation will not be affected.

Including that 21 per cent, Mr Tindall controls just over 50 per cent of the company.

A formal proposal is expected to go before the board next week.

Some analysts were predicting last night that the plan would fail, as the $5.75-a-share offer would not be enough to tempt shareholder and rival Foodstuffs, which owns a 10 per cent stake.

Foodstuffs' managing director, Tony Carter, said his company had not spoken to Mr Tindall.

It saw its stake as "a long-term capital investment in a business that was very complementary to our own, and we're still of that view".

Mr Tindall said Foodstuffs retaining its shares would not spell disaster for The Warehouse.

"There's nothing wrong with what we have at the moment," he said. "If it's not successful, everything stays the same."

If the privatisation bid succeeds it would be a return to Mr Tindall's roots.

He founded The Warehouse with one store and $40,000, and it stayed in private hands until 1994, when it was floated on the stock exchange.

He said yesterday he had been thinking over his plan for about six months.

"I believe this does secure the long-term future for the organisation and it's the best thing to do for our customers, business and shareholders."

- additional reporting: James Ihaka, NZPA