[color=blue:2c268c9161][b:2c268c9161]Woolies is takeover target - Carter[/b:2c268c9161][/color:2c268c9161]
11 June 2006
By GREG NINNESS

Woolworths, not The Warehouse, was the likely target of an overseas takeover bid, said Foodstuffs managing director Tony Carter last week. Speculation that Foodstuffs' sharemarket raid seeking 10% of The Warehouse was a defensive move against a potential Red Shed bid may therefore be misplaced.

Carter told the Sunday Star-Times: "We think it's likely that Woolworths Australia (which last year acquired Foodstuffs' direct competitor Progressive Enterprises, which operates the Foodtown, Countdown and Woolworths supermarket chains) is likely to be acquired by one of the global retail giants. I think that's inevitable."

If Woolworths was acquired by a global player such as US-based Wal-Mart, The Warehouse could face more competition in its mainstay general merchandise and fledgling supermarket business. In that scenario, The Warehouse may welcome a Foodstuffs partnership and the share purchase would look smart.

Carter said it was too soon to speculate on the outcome. "We have had no discussions (with The Warehouse) and are mindful of the regulatory environment and competition issues. So think it's just too early to comment." The Warehouse has made it clear it regards Foodstuffs' arrival on its share register as unwelcome. But Carter is a patient man, saying Foodstuffs intended to be a long term investor in the company.

A market source last week said Foodstuffs had a good understanding of The Warehouse. "They're retailers, they know the business inside out. They think it's a fantastic business and a good investment in its own right." But Carter was sceptical about the Warehouse hypermarket opened in Auckland last week. "The research I've seen shows people people want to keep grocery shopping separate."