Lowe’s and Woolies legal fight over Masters drags on

The fight between Woolworths and its estranged partner in Masters, US giant Lowe’s, is set to roll into a second week.

The sale of Masters sites could be held up by the court case. Picture: Stuart McEvoy

The high-profile legal stoush between Australian retailer Woolworths and its estranged partner in the Masters hardware business, US giant Lowe’s, is set to roll into a second week in court, putting further pressure on the local group’s exit from the venture.

The pair’s fight extended into a second day in the Federal Court in Sydney yesterday, with Lowe’s ­arguing that the dispute should be heard in open court and Woolworths pushing for it to be sent into an arbitration to be overseen by former high court chief justice Murray Gleeson.

The case has dragged the conduct of Woolworths and its advisers, liquidators KordaMentha and investment bank Citi, in the final days of the $1.5 billion fire sale of Masters, into the spotlight.

The publicity has been unwelcome for the Australian retailer which has insisted it is on track to exit Masters. Both it and David Di Pilla, the former investment banker and ­architect behind a consortium of private investors set to seize 82 Masters sites for $750 million, are standing by their deal.

Mr Di Pilla’s backers, who include the billionaire families behind retailer Spotlight, Chemist Warehouse and members of Sydney’s wealthy Salteri family, have signed deals to buy up to 61 Masters stores and another 21 development sites. The fate of another 13 sites carved off from the sale tranche may come into question as the case rolls on.

Lowe’s last month initiated surprise legal action after months of talks to sell its one-third stake in Masters back to majority owner Woolworths.

It brought the matter to a head last month by seeking an order to appoint an independent liquidator to oversee the winding up of Masters.

The action by Lowe’s has unearthed a potentially damaging “game plan” by Woolworths and its advisers to terminate the ­venture.

Lowe’s, which had earlier blasted Woolworths for “oppressive conduct’’ and acting in “bad faith’’ over the planned shutdown of Masters, has indicated its dissatisfaction with events in the lead-up to a meeting of Masters directors in late August.

The meeting, ahead of Woolworths’ full-year results last month, may be explored further if the case proceeds in court.

The opposing camps are preparing for that possibility as judge Lindsay Foster yesterday reserved his decision on whether to send the dispute to arbitration.