New Zealand’s The Warehouse in play as Adamantem, Tindall circle

Astaff member working at a Warehouse Group store north of Auckland. Picture: Brendon O’Hagan/Bloomberg

The $NZ350m ($380m)-plus New Zealand-listed discount department store chain The Warehouse has confirmed it has received an approach about a buyout proposal from its founder and major shareholder Stephen Tindall and Sydney-based private equity firm Adamantem Capital Partners, sending shares up more than 26 per cent in Monday morning trade.

Following a report in DataRoom on the buyout plans, The Warehouse Group told the New Zealand stock exchange the pair had approached the company “in relation to potential interest in acquiring its shares”.

“The Company advises you not to sell your shares (in The Warehouse) pending further advice from the Directors,” The Warehouse said.

“The Board of Directors cautions shareholders that the approach received did not constitute an offer by any person to acquire the business of the Company or shares of the Company, and that it, and any consideration of other alternatives, may not result in any proposal,” the company said in a statement, adding it would update the market as appropriate of relevant developments.

DataRoom understands Adamantem, founded by former Pacific Equity Partners executives Anthony Kerwick and Rob Koczkar, has been assessing the move with Stephen Tindall, who started The Warehouse in 1982 and remains a major shareholder.

Tindall and the Tindall Foundation own more than 50 per cent of the business.

It is understood Tindall wanted to pivot The Warehouse towards becoming a third player in the NZ supermarket industry.

Woolworths, with Countdown supermarkets, is one of the two major grocery companies, rivalling Foodstuffs, which owns Pak n Save, New World and Four Square.

There are concerns about the stranglehold the major players have on the NZ industry.

The government launched a grocery code of conduct last year.

The plan to sell more groceries through The Warehouse comes at a time when NZ is in recession and the cost of living has risen sharply.

Taking on the grocery chains has been a long-held ambition of Tindall. In 2006, he made a similar effort to privatise The Warehouse through a $1.6bn bid funded by PEP.

Tindall wanted to extend its product offering from general retail into grocery and fresh food, threatening the dominance of Woolworths and Foodstuffs.

However, Foodstuffs and Woolworths each took 10 per cent blocking stakes in The Warehouse and he abandoned the bid.

Known as The Red Shed, The Warehouse has become one of NZ’s most iconic retailers. Tindall’s son Robert serves as a director on the board.

The shares were worth more than $NZ7 in 2007 but now trade at around $NZ1, with its market value at $NZ365m ($328m).

For the 2023 financial year, The Warehouse generated $NZ29.8m in adjusted net profit, down from $NZ89.3m in the previous year, and it has $NZ48.1m net debt.

The group already sells some grocery items, contributing to 18.7 per cent of its revenue.

The company in the past financial year had 246 stores, including 88 The Warehouse stores, 66 Warehouse Stationery stores, 67 Noel Leeming stores and 25 stores of Torpedo7, which it sold earlier this year for $NZ1 following poor performance.

Shares at 10.57am AEST were up NZ30c to $NZ1.46.