Godfrey Hirst to challenge High Court ruling that rejected its appeal against scouring merger

Thursday 23rd June 2016

Godfrey Hirst, the Australian carpet maker, has sought leave of the High Court to challenge its June 8 ruling that dismissed an appeal against a merger of New Zealand's wool scouring operations that would give rival Cavalier Corp a monopoly in the domestic industry.

The High Court this month rejected Godfrey Hirst's appeal against the merger, which was approved by the Commerce Commission in November. The regulator had signed off on a plan for Cavalier Wool Holdings to acquire New Zealand Wool Services International's wool scouring business and assets, with Cavalier Corp, private equity firm Direct Capital and the Accident Compensation Corp owning 55 percent of the merged business, and WSI parent Lempriere taking a 45 percent stake.

The backers of the merger successfully argued that the real competition for the New Zealand scouring industry was in China, where increasing volumes of greasy, unscoured wool is being exported.

Cavalier Wool Holdings said it was "disappointed but not surprised" by Godfrey Hirst's decision to launch another appeal.

“There is currently excess wool scouring capacity in New Zealand, this proposal is about consolidating assets and realising efficiencies in order to keep wool processing in the country longer term," it said. "We want to avoid what has happened with off-shoring of scouring in Australia and instead create a single, internationally competitive wool processing entity in New Zealand.”

Cavalier shares last traded at 67 cents and have gained 91 percent in the past 12 months.

BusinessDesk.co.nz

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