Foodland won't give up on Woolworths

By SIMON HENDERY and AGENCIES

Perth-based Foodland Associated is refusing to concede defeat in its long battle to add Woolworths to its clutch of retail businesses, despite hitting a regulatory wall and being told by Woolworths' owner that the business is not for sale.

Dairy Farm International, based in Hong Kong, says it intends to keep the profitable 83-store supermarket group, "and will hold no further discussions with parties interested in acquiring it".

A possible sale of Woolworths has been on the cards since May, when Foodland's New Zealand supermarket subsidiary, Progressive Enterprises, applied for Commerce Commission approval to buy it.

Dairy Farm said at the time that Foodland's interest was unsolicited and it was not committed to a sale, but it appointed advisers JP Morgan to liaise with potential bidders.

It had several other expressions of interest, including Australia's largest retailer, Woolworths, which has no connection to its New Zealand namesake.

Progressive's second application for Commerce Commission clearance to acquire Woolworths was turned down last week.

Earlier commission approval for the deal was overturned by the Court of Appeal after a legal challenge from New Zealand's largest supermarket player, Foodstuffs.

Dairy Farm said after the latest Commerce Commission ruling that keeping Woolworths was in the best interests of Dairy Farm's shareholders.

But Foodland said it would continue to consider legal options for its bid, which include a Privy Council appeal over the first application or a High Court challenge to the second ruling.

Foodland managing director Trevor Coates said: "It has been clear throughout this lengthy process that the onus to achieve clearance from the Commerce Commission and subsequently encourage a sale lay entirely with us.

"In view of the substantial synergies that the combined businesses could achieve, [Foodland] will continue to consider the legal avenues available to achieve the required clearance in anticipation that a successful outcome may encourage Dairy Farm International, despite their announcement, to reconsider."

Woolworths Australia said it had declined a "take it or leave it" offer from Dairy Farm for Woolworths NZ.

"We remain interested and will maintain a watching brief," Woolworths managing director Roger Corbett said.

"We did our due diligence in New Zealand some months ago and have a clear understanding of the business of Woolworths New Zealand and its value," Woolworths finance director Bill Wavish said.

"The take-it-or-leave-it price from Dairy Farm was above what we consider to be in the interests of our shareholders.

"We will watch the future trading of Woolworths New Zealand with interest."

* The Commerce Commission has released its reasons for rejecting Progressive's application to buy Woolworths NZ. The 55-page Word document is available on the Commerce Commission's website under the "Adjudications" heading.