KEY POINTS:
Woolworths has told The Warehouse Group it is prepared to pay $7.15 a share to gain control of the Red Sheds company, the Business Herald understands.
The approach - contained in a written proposal to the retailer's board - was made in April, two separate sources say.
The
Commerce Commission is to rule this week on whether the Australian retailer will be allowed to take over The Warehouse.
The company's chairman, Keith Smith, denied the board had received an offer.
"We have not not received an offer and there is no bid," he said.
But asked if the board had received a written indication from Woolworths about what it was prepared to pay, Smith said "there is no offer", and refused to comment further.
A full takeover bid from Woolworths - which owns Progressive Enterprises supermarkets in New Zealand - is unlikely, as rival supermarket group Foodstuffs holds 10 per cent.
This would prevent Woolworths gaining full control.
An alternative is for Woolworths to make an offer under a scheme of arrangement, which would require approval from holders of only 75 per cent of Warehouse shares.
The Warehouse board is understood to have not yet responded to Woolworths' proposal.
The Warehouse share price yesterday tumbled 9c to $6.16 as the Commerce Commission decision neared.
The commission is deciding whether to grant clearance to Woolworths and Foodstuffs to seek up to 100 per cent of the company.
The decision has been delayed four times. It is due tomorrow, but may come today.
Each delay has increased speculation that the commission would not give either party clearance to buy the Red Sheds, and Warehouse shares have slid from a high of $7.32 in April.
Should approval be granted to both Woolworths and Foodstuffs, a bidding war is expected and the Warehouse share price would probably rocket.
The media has speculated that Woolworths could pay $8 or more.
News that it has made an approach to pay only $7.15 would probably lower expectations of a high bid and limit how far the share price would rise.
A $7.15 a share offer values The Warehouse at $2.2 billion.
Newstalk ZB breakfast host Paul Holmes started speculation that Woolworths had made a bid, saying yesterday morning on his breakfast show that he knew it had.
"If there is such a bid - and I believe there is - shouldn't the entire shareholding community know that there is?" he said. "Would shareholders have continued to desert the share if they knew there were an offer on the table?"
Like Foodstuffs, Woolworths owns about 10 per cent of The Warehouse.
Smith said yesterday the board had had discussions with "shareholders", but they had been general discussions with no talk of strategic issues or bids.
"There are two parties that we know and that the market knows are out there," he said. "I don't know their intention after the Commerce Commission comes through. It does not matter which party I speak to or any third party - they have continuous disclosure obligations that are no different to the ones we have."
Sources close to Warehouse founder Stephen Tindall's camp have said that Tindall has insisted Woolworths and Foodstuffs obtain advance clearance so that once any bids were made there was no potential for delays.
Tindall - whose interests control more than 51 per cent of the company - made an attempt to privatise The Warehouse late last year.
That $5.75 a share offer was blown out of the water by Woolworths, which paid $6.50 a share for its 10 per cent stake in the company.
Tindall is in Valencia for the Louis Vuitton Cup and could not be contacted.
