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Woolworths divests stake in The Warehouse Group for $65.46m

RBR Staff Writer Published 04 March 2015

Woolworths has divested its 8.8% stake in New Zealand retailer The Warehouse Group to James Pascoe Group, in a deal worth NZ$87.1m ($65.46m).

Woolworths

The company sold 30.5 million shares in the retailer for NZ$2.85 per share, as The Warehouse investment was no longer required as part of its New Zealand strategy.

Woolworths has ceased its plans to make its foray into the discount department store business and replicate its BIG W business.

The company will now focus on selling general merchandise in New Zealand through its e-commerce and catalogue business Ezibuy, which was acquired and merged with BIG W.

Woolworths also intends to invest over $500m in reducing grocery prices and improving service in supermarkets to compete better with Coles and Aldi, reports The Sydney Morning Herald.

However, Woolworths' proceeds from The Warehouse shares will not be included in the pipeline of cost savings which will be reinvested in supermarkets.

Earlier in 2006, Woolworths bought 10% stake in The Warehouse for $NZ200m ($150.7m) and considered launching a $NZ2.2bn ($1.97bn ) takeover offer in 2007.

The New Zealand's Commerce Commission had, however, countered Woolworths' takeover plans as it thought an acquisition would substantially lessen competition.


Image: Woolworths currently operates retail stores in Australia, New Zealand, Hong Kong, and India. Photo: courtesy of Bidgee / Wikipedia.