When do we expect to hear the result from the appeal?
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Dr Who Warehouse if it gets into Extra stores with supermarkets in store. The Warehouse Extra Store in Sylvia Park has made Mt Wellington the cheapest for groceries. Even though is not getting the same buying deals as Woolworths and Foodstuffs. Comerce Comission had no choice about the Progressive Enterprises take over of Franklins. Because owner said we sell or we shut doors. And as both Woolworths and Foodstuffs have blocking stakes will either party give in to let a take over ever happen. In the mean time the warehouse has stopped expanding. So both Foodstuffs and Woolworths doing what they like increasing their margins.
This looks like a no brainer play
1. Takevoer should be approved with price going up
Q. Is the takeover going to lessen competition?
A. Only in Sylvia Park [plus a few other markets]. For the rest of the country what competition. The law does not attempt contemplate what the effect on competition may be in 10 years. but judges can do what they want....
2. Don't think the brains trust at WHS have been sitting on their behinds for the past 2 years, they will have a plan B if acquisition is declined. Price should go up.
3. To get a blocking stake [of up to 20% each] Foodies and Progs will have to buy some more shares. This would push the price up to $7.00.
4. Worst case ie nothing happens. A PE of 16 at bottom of the cycle is not too traumatic to turn this into a hold. Also consider the strategic value of the retail footprint.
Cheers
I really dont think we have seen the bottom of the retail cycle. Not by a long mile.
A possible T/O target, yes. But then it is a gamble.
For a start a blocking stake is 10%, not 20%. Both Foodstuffs and Woolworths Australia already have this. So there is no need to buy any more shares to block any deal.
'Plan B' was Stephen Tindall's mooted $5.70 offer to privatise the company before first Foodstuffs then Woolworths Australia gained their blocking stakes. However that offer was put together with a merchant bank in Australia before anyone had heard the term 'credit crunch'. There cannot be a 'plan B' without both Foodstuffs and Woolworths agreeing to sell out. At the moment in this credit squeezed market, my guess is that only Woolworths would be able to stitch together a deal. And the lack of a competitive offer means they would not need to bid anywhere near $7. Remember Foodstuffs only paid $5 for their stake. In this market a Woolworths bid of $5.50 would be a super premium to the market price and could be a goer.
We have already considered the strategic value of the local footprint. That is why Foodstuffs and Woolworths were sniffing around and bought their stakes. Don't overplay the hand by counting the chips twice!Quote:
4. Worst case ie nothing happens. A PE of 16 at bottom of the cycle is not too traumatic to turn this into a hold. Also consider the strategic value of the retail footprint.
And what 'E' did you use to calculate your PE ratio hairdresser? Last years reported 'E' or the forecast 'E' for this year?
I haven't followed WHS closely since I ceased to be a shareholder a couple of years back. Perhaps it is a good buy on today's market? It might very well be. The only problem is I can think of a number of retail shares out there that are even better buys...
SNOOPY
Bought at 3.90
Hey Footsie, we finally agreed on something. :p I too bought into WHS today. Gonna be tucked away in the long term portfolioly.
WHY buy Warehouse when you get a lot more for your money and cum div @ the good stores of SMITH CITY..