Just when Woolworths thought it had put the Masters hardware disaster behind it with those deals last Thursday to close and sell off its outlets and stock, along comes its partner, U.S. hardware giant, Lowes with legal action that could see a key part collapse.
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Woolworths’ three-way deal to sell its hardware assets for $1.5 billion has been thrown into doubt by its former joint venture partner Lowe’s Companies, which has launched legal action in the Federal Court. As previously announced, Lowe’s notified Woolworths on January 15, 2016, of its intent to exercise its put option held under the JV arrangement.
“Lowe’s alleges that Woolworths has conducted the affairs of Hydrox [the Masters joint venture vehicle] in a manner oppressive and unfairly prejudicial to Lowe’s, including by wrongfully and in bad faith seeking to terminate its joint venture agreement and by seeking to exclude Lowe’s from the management of Hydrox”, Lowe’s said in a statement.
Investors Mutual director Anton Tagliaferro said the American company appears unsatisfied with the bargain basement price Woolworths has negotiated in its desperation to exit hardware.
Woolworths told the ABC in a statement that Lowe’s filed the court application in its absence.
Observers claim that Lowe’s playing a unsafe game of bluff with its court action against Woolworths over the winding up of the Masters Home Improvement business. (WOW), accusing it of acting in “bad faith” in regards to the winding up of their joint venture.
The net proceeds of the sale are expected to be less than $500 million after windup costs, lease compensation and payments to Lowe’ – reflecting the price Woolworths must pay Lowe’s.
“Went into Masters today to buy paint, the advertising said all Sherwin Williams paint was half price and even the salesperson told us it was (half price). when we went to buy it, it wasn’t half price”, another posted.
“Certainly it’s going to be postponed for a number of months and delayed”, he said.
Now the big “Yank” hardware retailer Lowes the minor shareholder in the Masters deal and the organisation who claimed they knew how to make Masters a success in Australia, is whinging all the way to the Federal Court in a move as some observers claimed could backfire on them.
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Woolworths last week also announced a .2 billion full-year loss, its first result in the red in 23 years.
