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James Pascoe lifts Warehouse stake to 16.4%, buying Woolworths' shares

03 Mar 2015

James Pascoe, the retail group owned by David and Anne Norman, has lifted its holding in Warehouse Group to 16.4 percent after buying out Australian retailer Woolworths' stake for $87.1 million.

James Pascoe acquired 30.55 million shares at $2.85 a piece in an off-market sale, according to substantial shareholder notices posted to the NZX. The latest purchase has more than doubled the investor's stake since it first emerged as a substantial shareholder with 6.3 percent in October last year.

In a brief statement, the investor, which owns Farmers, Whitcoulls, Pascoes, Stevens, Stewart Dawsons and Goldmark, said it does not intend to make a takeover bid for New Zealand's largest listed retailer, but was investing in "another strong New Zealand brand that fits within our philosophy of supporting New Zealand retail."

James Pascoe has been lifting its stake in the retailer, as the shares traded at a near two-and-a-half year low in January. Shares of the retailer surged up 6.6 percent to a near two-month high $2.90 after the announcement.

Warehouse shares have been under pressure since the start of the year, when it said it expects first-half earnings to fall about 20 percent to $37 million as cold, wet spring and summer weather forced it to discount clothing and other seasonal merchandise at its 'red sheds' general merchandise stores and sales declined at its Noel Leeming consumer electronics chain.

Investors and analysts have said they want the company to produce profit growth this financial year after the retailer spent hundreds of millions of dollars overhauling stores and buying new businesses the past few years.

In a statement to the Australian stock exchange, Woolworths said its wholly-owned New Zealand subsidiary General Distributors, sold its 8.8 percent stake in Warehouse after it "determined that the investment in Warehouse is no longer required as part of its New Zealand strategy". The Australian grocery chain took the stake in May 2007, effectively blocking rival Foodstuffs from mounting a takeover, which took a 10 percent stake in March 2007, according to NZX data.

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