UPDATE 1-Rivals extend ban on bids for NZ's Warehouse

(Updates with details, background)

WELLINGTON, Feb 28 (Reuters) - Rival grocery chains seeking permission to bid for New Zealand retailer The Warehouse Ltd (WHS.NZ) have agreed not to complete a takeover bid before the case is heard in court, The Warehouse said on Thursday.

When the High Court allowed the Commerce Commission leave to appeal the court's earlier ruling clearing a sale, it lifted a previous order barring Woolworths Ltd (WOW.AX) and Foodstuffs from bidding in return for a voluntary agreement they would not move before the end of February.

The two parties said in a brief statement they have agreed to extend the previous undertaking not to complete an acquisition of The Warehouse, which was due to expire on Friday, until May 1.

The court case is set down for three days from April 29.

Shares in The Warehouse, New Zealand's largest-listed retailer, were flat at NZ$6.15 on Thursday having traded between NZ$4.94 and NZ$7.32 over the past year.

Analysts have said that if Woolworths and Foodstuffs, which dominate grocery retailing in New Zealand, are allowed to bid, a deal could value The Warehouse at up to NZ$8 a share, or NZ$2.5 billion ($2.0 billion). Woolworths has been tipped as winning any takeover battle because of its greater financial clout.

Woolworths and Foodstuffs declined to comment on whether they would launch a bid as soon as they were entitled to.

The Warehouse sells a broad range of general merchandise in its 85 "Red Shed" stores. It is about 50 percent-owned by founder Stephen Tindall and interests close to him, while Woolworths and Foodstuffs each own about 10 percent.

The Commission has argued that if either supermarket chain bought The Warehouse, it would result in a substantial lessening of competition. (NZ$1=$1.23) (Reporting by Adrian Bathgate; Editing by James Thornhill)