Foodstuffs To Divest Its 9% Interest In The Warehouse Group

Summary

  • New Zealand's biggest grocery distributor, Foodstuffs, will sell its stake in The Warehouse Group.
  • The Warehouse Group has been placed under a trading halt for the smooth conduct of the sale.

New Zealand’s largest grocery supplier, Foodstuffs, has announced to sell its 9% stake in The Warehouse Group Limited (NZX:WHS).

Read: The Rise of Online Retail Shopping Amid COVID-19 And 4 Related NZX Stocks

A notification was received by The Warehouse, which mentioned that Foodstuffs, along with Cash Wholesalers and Wardell Bros & Coy, have entered into a binding agreement to sell off its 9% share (amounting to $114 million) in WHS by way of an underwritten sell-down.

Source: Copyright © 2021 Kalkine Media

Sale Proceedings

Forsyth Barr, a brokerage firm, will manage as well as look into the underwriting of 31,120,089 shares, which are currently owned by Foodstuffs.

For the smooth sale procedure on 21 May 2021, The Warehouse was placed under a trading halt on the NZX, which will continue until Foodstuffs validates the completion of the sale to The Warehouse or the opening of the market on 24 May 2021.

Commerce Commission Impeded The Warehouse Takeover

Foodstuffs associated with The Warehouse in 2005 when the latter was planning to enter the grocery retail market. It had requested the Commerce Commission to outrightly buy The Warehouse.

Source: Copyright © 2021 Kalkine Media

Its strong competitor, Countdown’s owner, Woolworths Group Ltd (ASX:WOW) too, bought 10% stake in The Warehouse to obstruct Foodstuffs, which was later sold off at a loss to the James Pascoe Ltd Group of Companies in 2015.

However, the acquisition ambition of both the companies - Foodstuffs and Woolworths - was thwarted by the Commerce Commission, stating the sizeable reduction in the competition thereafter.

Read: Kiwi Retail Sector And 5 Related Stocks- WHS, HLG, BGP, KMD, MHJ

Prudent Decision By Foodstuffs

Chris Wilkinson, Managing Director at First Retail Group Ltd and an expert in retail strategy, opined that the divesting decision of Foodstuffs was wise given the anticipated headwinds for the retail sector.

Read: Changing Dynamics of Retail Industry in New Zealand

Huge spending and surge in the retail sector were mainly because of the closed borders. However, as per Wilkinson, this magnitude was at a peak, but with the improved economic environment and travel bubbles, the situation may transpose.

Read: How Has the Retail Trend Shifted Over The Course of the year?

About The Warehouse Group

The Warehouse Group is one New Zealand's largest retailers, with sales of NZ$3 billion. It is the 3rd-biggest retailer across the globe to go carbon neutral.

About Foodstuffs

Foodstuffs is Aotearoa's largest grocery distributor, which is 100%-owned and managed by the Kiwis. It is customer-centric and offers healthy and affordable food at fair prices.

Read: NZ food price inflation surges as fruits and vegetables get costly

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