Carpet maker Godfrey Hirst said it will be looking at re-locating some of its manufacturing operations offshore after the High Court ruled in favour of a Commerce Commission decision that will make its main competitor, Cavalier, a dominant player in the New Zealand wool scouring industry.
The decision paved the way for Cavalier Wool Holdings to buy Wool Services International (WSI), a company with close associations to the late Allan Hubbard, who headed up failed finance company, South Canterbury Finance.
Godfrey Hirst, which has operations in New Zealand, Australia and the United States, said the decision meant Cavalier would create a monopoly for Cavalier. Godfrey Hirst general manager Tania Pauling, said the judgement was disappointing for the New Zealand wool industry and for all end users of New Zealand strong wool.
"It creates a monopoly in a key sector which potentially jeopardises the longevity of the New Zealand wool industry,' she said.
"We intend reviewing the judgement over the coming days and will be considering our options going forward, including the possibility of relocating some of our manufacturing assets offshore," Pauling said in a statement.
Godfrey Hirst argued that the Commerce Commission had erred in approving a bid by Cavalier Wool Holdings to create a wool scouring monopoly.
In June, the Commerce Commission approved authorising Cavalier Wool Holdings, which is 50 per cent owned by carpet maker Cavalier Corp and 25 per cent each by Accident Compensation Corp and private equity investor Direct Capital Investments, to buy the scouring assets of NZ Wool Services International (WSI).
Its analysis found a net benefit of $13.5 million to the country over five years.
WSI's assets were put up for sale because its two biggest shareholders, Plum Duff Ltd. and Woolpak Holdings, with a combined 64 per cent holding, went into receivership. Both companies had ties to South Canterbury Finance, which went into receivership last December.
- APNZBy Jamie Gray Email Jamie