Warehouse shares leap above Tindall's offer [+audio]

Shares in The Warehouse opened 4 per cent above the offer price made yesterday by founder Stephen Tindall, as he bidded to take the company private.

In an indication the offer will have to be sweetened, shares were up 89c early to $6, compared to Mr Tindall's bid price of $5.75, on turnover of 470,000 shares.

Mr Tindall said his plans to privatise the company would enable proposed strategies to be implemented "without airing our strategies to all our competitors".

Trading in the shares was halted shortly before the sharemarket closed at 5pm yesterday, at the request of The Warehouse Group.

The request came as Mr Tindall announced the offer, which valued The Warehouse around $1.8 billion.

Mr Tindall, who along with interests associated with him controls about 50 per cent of the company, is making the bid as part of a consortium with Australian private equity firm Private Equity Partners.

The offer is a 12.5 per cent premium to the last trade before shares were placed on a trading halt when they were down 3c for the day at $5.11. It is also 47 per cent above the $3.91 level before Foodstuffs began snapping up shares in early June.

"Under a private vehicle you can go just that much faster and you can take on quite a bit more risk," Mr Tindall told National Radio today.

"I think we've got the right number of stores at the moment. I think there's quite a lot of conversions to do. For example, our Whangarei store at the moment we're just converting to a hypermarket.

"It's more the conversion, I think, or maybe the enlargement than it is the building of extra stores."

The $5.75 a share offer to shareholders was "a very full and fair price", and compared with an average broker valuation of $4.70.

Mr Tindall did not rule out the possibility of refloating The Warehouse in future.

"It depends on the evolution of a company whether it's a good thing to either become public, or to become private. My personal view is at the moment in our evolution becoming private is the best for the business, both for the customers and the staff," he said.

After the sharemarket closed yesterday The Warehouse Group requested the trading halt on its shares be lifted, saying it had formed a committee of independent directors to ensure the best interests of the company and its shareholders were maintained.

"The committee notes that the final form of the consortium's proposal is not yet certain. The committee also notes that the notice leaves open the possibility of structures other than an offer under the Takeovers Code being proposed," the company said.

The committee would evaluate any proposal on its merits, but no further comment would be made at this stage on Mr Tindall's bid.

A key factor in the success of the bid will be whether Mr Tindall can woo 10 per cent shareholder and rival Foodstuffs.

Foodstuffs managing director Tony Carter said the company had not been in talks with Mr Tindall before the bid.

"We were surprised. It's too early for us to make any further comment, we just want to consider it," Mr Carter told NZPA.

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

Foodstuffs owns the Pak 'N Save, New World and Four Square chains.

Hamilton Hindin Greene partner Grant Williamson said Foodstuffs was unlikely to sell into the offer, thwarting the consortium's goal of full control.

"My impression was that it was more commercial reasons they got that holding in The Warehouse, probably more so than financial, so I don't think a few extra dollars -- when they paid $5.00 and they're getting offered $5.75, it's not a huge gain for them," Mr Williamson said.

The Warehouse recently changed its focus from offering cut-price goods of often lower quality to more upmarket merchandise, albeit still under the bargain banner, and has moved into grocery and alcohol sales.

Mr Tindall opened the first store in Auckland in 1982. The company now operates 128 stores throughout the country, comprising its distinctive big box-style red shed discounters, and Warehouse Stationery.

The Warehouse floated on the stock exchange in 1994. Mr Tindall was managing director until January 2001, and acting managing director in 2003/04, and remains a non executive director.

Initiatives begun a year ago, shortly after new chief executive Ian Morrice took the reins in 2004, are beginning to pay off.

The company has opened its first "Warehouse Extra" at Auckland's new Sylvia Park centre in June at the beginning of a five-year $60 million plan to expand into food and general merchandise in one super-shop.

Its financial performance has improved, and the company has cut loose its loss-making Australian operations.

- NZPA WGT mjd kn