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.