Cavalier Wool Holdings has entered the race to buy the country's only other wool scour operator and marketer, New Zealand Wool Services International.
Yesterday, Cavalier announced it had applied to the Commerce Commission for permission to acquires shares in, or the assets of, New Zealand Wool Service International (WSI), whose cornerstone shareholder is interests (in receivership) associated with South Canterbury businessman Allan Hubbard.
Those interests own about 65% of WSI.
At least six other entities, including Wool Partners Co-operative and two Chinese companies, are believed to be interested in buying the stake.
Cavalier Wool Holdings (CWH) chief executive Nigel Hales said any bidder for Hubbard's WSI stake would have to bid for the whole company.
If successful, CWH, a commission wool scour operator, would merge WSI scours at Christchurch and Whakatu into CWH's two scours in Timaru and Napier and sell WSI's brokering and trading business.
"We will stick to our model and make sure the good things WSI is doing will continue, and we will facilitate the sale of its trading division."
WSI managing director Michael Dwyer said yesterday the scour assets were not for sale but he was concerned CWH's interests could create some uncertainty among companies doing business with them.
He said the two companies had vastly different business models.
WSI was a merchant scourer which sourced and owned the wool handled by its scours, whereas CWH was a commission scourer which worked under contract for exporters and users.
This week, Wool Partners Co-operative chairman Jeff Grant warned that should the company fail to get sufficient support to create a grower-owned marketing business, WSI would be the only remaining New Zealand owned exporter and there was a chance all the country's wool exporters would be foreign owned.
CWH is 50% owned by publicly-listed Cavalier Corporation, with the balance equally held by the Accident Compensation Corporation and Direct Capital.
Mr Hales said CWH has been in discussions with WSI for much of last year and was surprised when WSI last week reacted angrily to a request to support a CWH application for Commerce Commission clearance to buy its scour assets.
Mr Hales said a merger would create economies of scale efficiencies, reduce costs and consolidate the fragmented wool industry.
It would also retain New Zealand ownership, unlike Australia where few scours now operate and the bulk of wool is scoured in China.
Mr Hales said CWH, if successful in its bid, intended creating a super-store complex for wool alongside its scours, which would create transport and handling efficiencies and reduce costs.
