Woolworths can’t sell Masters – Lowe’s

MastersUS hardware giant Lowe’s claims Woolworths is negotiating the liquidation of the companies’ Masters joint venture without legal authority.

Lowe’s has applied to have an independent liquidator appointed to Hydrox Holdings, the joint venture company running the soon-to-close Masters hardware stores in Australia.

Noel Hutley QC, for Lowe’s subsidiary WDR Delaware Corp, told the Federal Court in Sydney on Wednesday that Woolworths is selling off the joint venture without proper legal authority.

“Now that, I would have thought, in relation to an organisation of this size, is a matter of deep concern and it’s a matter of deep concern to us,” he told the court.

“And to say that we have no economic interest in the outcome, is within our respective submission flawed. The joint venture agreement clearly contemplated that pending the outcome of any buyout, we would remain on the board and have all the powers that flow from that.”

But David Thomas QC, for Hydrox, questioned the urgency of Lowe’s application, given the sale of Masters had been planned since January.

He said Lowe’s had already exercised its put option to sell Woolworths its 33 per cent share of Masters.

Thomas said the supermarket operator had also agreed that any property sales would be carried out with the consent of the US hardware retailer.

“His client has no economic interest,” he said.

“The only matter of dispute is value.”

Justice Lindsay Fisher ordered both parties to return to court for the interlocutory hearing on September 15.

The joint venture was formed in 2009 in an attempt to rival the dominant Bunnings chain owned by Woolworths’ supermarket-owning rival Wesfarmers.

But the venture has been a big drag on Woolworths’ earnings, and the company announced last week that it will shut all Masters stores by December 11, a day before it posted a $1.2 billion full-year loss driven by heavy writedowns on its disastrous foray into hardware.


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