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The Commerce Commission has blocked Australia's Transpacific Industries from buying another New Zealand waste company, in a decision one competition lawyer says could be ominous for The Warehouse's suitors.
The commission declined yesterday to give clearance for Transpacific to buy the South Island assets of EnviroWaste from Australian
private equity firm Ironbridge Capital.
Transpacific was also refused clearance to buy a 50 per cent share in Manawatu Waste.
Commission chairwoman Paula Rebstock said it "was not satisfied that the proposed acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in the markets".
The potential for reducing competition is also what the commission is considering when deciding whether to allow Woolworths Australia or Foodstuffs take over The Warehouse.
After four delays, the commission is due next Friday to rule on The Warehouse, a decision that will have taken almost six months.
Tony Dellow, a competition partner at law firm Buddle Findlay, said the rule of thumb is that the longer the commission deliberates on a decision, the more likely it is to rule against an application.
This was the case with yesterday's EnviroWaste decision - on an application Transpacific lodged just before Christmas.
"It really does bear out that when the commission takes a hell of a long time, it's a cause for concern by the people that have put the application in," said Dellow.
Shares in The Warehouse have slipped from a high of $7.32 last month as investors have become less confident the commission will approve the buyout, potentially sparking a takeover war. Yesterday they closed at $6.25.
While neither Woolworths Australia nor Foodstuffs has declared its intentions, a decision giving advance approval for both parties could set off a bidding war that would further boost The Warehouse's share price.
A "no" decision for one or both parties might see the possible sale bogged down in appeals.
The commission has not yet supplied the reasons for its EnviroWaste ruling, and Transpacific said yesterday that it expected to be allowed to acquire some but not all of the EnviroWaste assets.
"It is our view that the Commerce Commission's decision means that the commission does not think we should buy them all," said Terry Peabody, Transpacific's executive chairman.
"While obviously we do not agree that the commission should have declined clearance for any of the assets, we are still confident that, once we see the commission's report, the major strategic assets in which we are interested will be available to us.
"We would like to buy all of these interests and we will be looking at the commission's written decision and the options and opportunities available to us over the next few weeks," Peabody said.
Transpacific already owns significant waste assets in New Zealand, having taken over the NZX-listed Waste Management last year.
Its attempted purchase of EnviroWaste - New Zealand's second-largest rubbish collection and disposal company which Ironbridge reportedly paid $365 million for - was the latest in a string on acquisitions which has seen Transpacific grow rapidly in Australasia over the past couple of years.
Shares in Transpacific - which took a secondary listing on the NZX after the Mainfreight takeover - were untraded in New Zealand yesterday.