Do you agree with the Commerce commission that allowing a NZ monopoly in wool scouring in NZ will be outweighed by the benefits?
Cavalier believes it can service all NZ's scouring capacity, in two plants, and that will bring big cost savings to the industry. More competition will be eliminated by this deal with the trading arm to be sold as a going concern. They have strong brands, are often big buyers of wool at auction and also provide good market information, and if lost will reduce the competitive edge in the market.
Is this part of the rationalisation this industry needs to address as a result of the big downturn in production from NZ's sheep growers?
NZ Wool Services International managing director Michael Dwyer says he is "astounded" at the Commerce Commission's preliminary finding yesterday that it would allow Cavalier Wool Holdings to acquire up to 100 per cent of Wool Services International.The acquisition, if the commission's final decision is unchanged, would in effect create a monopoly in the wool scouring industry in NZ. Cavalier Wool Holdings is 50 per cent owned by Cavalier Corporation, with 25 per cent apiece held by Direct Capital and ACC.
Wool Services has been adamant its scourers are not for sale, but a controlling stake in the wool processor and exporter is on the market as Plum Duff and Woolpak Holdings, which together hold a 63.8 per cent of Wool Services, have been placed in receivership reports Stuff. Plum Duff is owned by Allan Hubbard. Cavalier has said that, if given the go-ahead by the commission, it would close Wool Services' scours at Belfast in Canterbury and Whakatu in Hawke's Bay and move those scour lines to its Timaru and Awatoto sites.
Cavalier would look to sell Wool Services' wool trading arm as a going concern.Mr Hales said Cavalier was pleased with the preliminary decision and had already placed an indicative offer with the receivers of Plum Duff and Woolpak Holdings. In its application to the commission, Cavalier argued that consolidation in the industry would make New Zealand more competitive against Chinese rivals and keep Wool Services' assets New Zealand-owned.
The commission said it expected the benefits to the public would outweigh the loss of competition.
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