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Australia's Lempriere locks up 75% of NZ Wool Services

BUSINESSDESK: Australian wool merchant and processor Lempriere Holdings has locked up 75% of New Zealand Wool Services International, scuttling a local joint venture's plan to create a national wool-scouring monopoly.

The Melbourne-based company bought 64% of the New Zealand scourer out of receivership and entered into a lock-up agreement with WSI managing director Michael Dwyer, four senior employees and a retired employee for a further 11%, WSI says.

The Australian company will now make a full takeover offer at 45 cents a share, valuing the scourer at $31 million, a 22% premium to the last trading price of 37 cents. The deal will require Overseas Investment Office approval, according to the pre-bid agreements lodged with the stock exchange.

"Having a majority of its shares tied up in two companies in receivership had meant a lengthy period of uncertainty for its employees and customers," WSI chairman Derek Kirke says. "The board therefore welcomed the prospect of a conclusion to the process."

Lempriere's successful bid for the 64% stake owned by Allan Hubbard-related companies Woolpak Holdings and Plum Duff ends a bid by Cavalier Wool Holdings to build a national wool-scouring monopoly.

The joint venture between Cavalier Corp, Direct Capital Investments and the Accident Compensation Corp won Commerce Commission authorisation to build a monopoly and had the decision upheld in the High Court after carpet maker Godfrey Hirst opposed the move.

Mr Kirke saysthe board will seek an independent report once it formally receives a takeover offer before making a recommendation to shareholders on whether to accept.

The local wool scourer reported a 66% fall in annual profit to $2.2 million, even as sales rose 0.9% to $202 million. The company blamed a sharp fall in wool prices and a stubbornly high New Zealand dollar for the decline in earnings.

Lempriere owns specialist merino wool merchant The Merino Co, with businesses in the US, Argentina and South Africa, and is one of the world's major suppliers of fine wool to European, Japanese and American fashion houses.

The 150-year-old Australian company has been held in the same family for five generations, with William Lempriere the current managing director.

Comments and questions
5

"The Melbourne-based company bought 64% of the New Zealand scourer out of receivership and entered into a lock-up agreement with WSI managing director Michael Dwyer, four senior employees and a retired employee for a further 11%, WSI says."

MMM I wonder if said Director and "senior employees" scored a march on the ordinary shareholder, and how ethical is this?
Sorry, silly me, of course it's ethical, it's nz farming politics and that makes it all perfectly normal!

When the dust settles it will be interesting to see what company ends contracting the farmers to supply wool to the scours.????

right on John,
the staff and Directors have acted in self interest all the way here, with little regard to the minority shareholders - an attitude of "who give a toss" about them
yet another rought of the the 'little' investors by the people in power.

one can only wonder why there is little enthusiasim by 'little people' to invest on the stock exchange

however, that said, a new owner focused on profit rather than a company on staff self interest can only be good for the wool sector and probably NZ as a whole

You're not wrong Gaffer, problem is the "incentive to sell" will not be in the share price they received for the authorities to see, but rather in another more "inventive" way.
Producer Boards, Co-ops all the same, funded by farmers, milked by Governance.

What an easy way for an Australian family to loose $31M. Thought they would have learnt this from Mr Hubbards experience.