Foodstuffs chief Tony Carter wants to keep the company's expansion options open. Photo / Herald On Sunday
New Zealand supermarket co-operative Foodstuffs will follow the lead of its Australian rival Woolworths and challenge the Commerce Commission's decision not to allow it to buy The Warehouse.
Foodstuffs said yesterday it had lodged an appeal in the High Court.
Managing director Tony Carter said an appeal was
consistent with the co-operative's position of wanting to keep all options open.
Woolworths - which owns Progressive - revealed earlier it had a High Court hearing set down for October 23.
Analysts believe Foodstuffs' main reason for wanting The Warehouse is defensive. It is already New Zealand's dominant grocery player and is determined to ensure that Woolworths can't use The Warehouse to expand.
To that end, the Pak 'N Save owner is likely to have been more comfortable with the commission's decision to disallow both parties.
But given that Woolworths is appealing and is confident of success Foodstuffs would not want to risk giving a free run in the event it was successful. Most in the market also believe that Foodstuffs - with a more dominant position as a wholesale grocery distributor - will have a more difficult case to make.
The Commerce Commission appears to have ruled that the two parties cannot buy The Warehouse on the basis that it could become a sizeable third player in the grocery market. But the exact reasons are unclear as the full decision document has not yet been released by the commission.
The market is also expecting Australia's Private Equity Partners to make a renewed bid for the Red Sheds - possibly in partnership with The Warehouse founder Stephen Tindall.
PEP and Tindall made a bid of $5.75 last year, but it was rendered redundant after Woolworths paid $6.50 for the 10 per cent stake it currently holds.
Shares in The Warehouse rose 4c yesterday to close at $6.07.
