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BUSINESSDESK: Australian wool merchant Lempriere has ruled out selling New Zealand Wool Services International's scouring assets, its formal takeover document shows.
The Melbourne-based company has locked up 75% of WSI's shares, having bought control when it acquired the majority stake owned by Allan Hubbard-related companies Woolpak Holdings and Plum Duff and entered into lock-up agreements with some of the firm's executives.
Lempriere is making a full takeover bid at 45 cents a share, valuing WSI at $31 million, a 22% premium to the trading price before it emerged as a buyer. The shares last traded on September 21 at 46 cents.
WSI's scouring assets attracted a rival bid by Cavalier Wool Holdings, a joint venture between Cavalier Corp, Direct Capital Investments and the Accident Compensation Corp, to build a national wool scouring monopoly, which won Commerce Commission authority to do so.
Lempriere's local vehicle making the bid, WSI Holdings, says it is aware of CWH's interest in the scouring assets but has "no intention to dispose of those assets".
The Australian company plans to undertake a strategic review of the New Zealand wool merchant and will align WSI's business practices, systems and processes with Lempriere's. It will install appropriate board representation and seek a review of WSI's trade finance terms that could lead to changes in its capital structure.
Lempriere also plans to halt dividend payments, while reserving the right not to do so or to resume them at any time in the future.
WSI's board, excluding managing director Michael Dwyer, who has entered into a lock-up agreement with Lempriere, has recommended shareholders take no action until an independent adviser's report is completed.
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.