Australian supermarket group Woolworths is withdrawing legal action to appeal a New Zealand Supreme Court decision that prevents it from launching a takeover for New Zealand discount retailer The Warehouse Group.
The New Zealand Commerce Commission stopped Woolworths and New Zealand grocery chain Foodstuffs from mounting separate takeover bids for Warehouse earlier this year, saying their control of Warehouse's Extra food retailing outfit would have lessened competition.
The Warehouse board recently terminated the Extra rollout because of the challenging economic climate in New Zealand.
In a statement on Thursday, Woolworths said:
"As a consequence of that change, Woolworths has reached the view that there are no relevant competition issues impacting a potential acquisition of The Warehouse and therefore no reason for it to continue with its application for leave to appeal to the Supreme Court in an endeavour to achieve a clearance."
Woolworths already has a 10% stake in Warehouse. It is yet to decide whether to mount a takeover bid.
"Woolworths continues to monitor the performance of the Warehouse, the New Zealand retail climate, financial market conditions and the outlook for the New Zealand economy."
The Warehouse said on Thursday that had been advised of Woolworths' decision to withdraw its appeal to seek leave.
Earlier in October, Warehouse said its decision to can the Extra rollout would not leave it vulnerable to possible bidders.
The three existing Extra stores in New Zealand would undergo a phased withdrawal from fresh produce, meat and frozen foods, the company said at the time.
Warehouse managing director Ian Morrice had said that he expected the company to fare better than other New Zealand retailers and would now focus on its core general merchandise and apparel categories.
The move to scrap Extra is expected to cost Warehouse as much as $12 million.
