Buyer seeks clearance for Richina purchase

By DANIEL RIORDAN

Hawkes Bay tannery business Lowe Corporation has sought Commerce Commission approval to buy Richina Pacific's leather processing division, Colyer Mair.

Richina chairman Alastair MacCormick downplayed the significance of the move, saying that for an international investment company such as Richina Pacific, such approaches "were not out of the ordinary."

He said a number of parties, including Lowe, had indicated an interest in buying Colyer Mair, and discussions had been held with them. He said shareholders would be advised when there was anything to report.

Lowe managing director Graeme Lowe said his company viewed the acquisition as an opportunity to develop its leather business - something that fitted well with the strategic plan the company had developed since it sold its meat slaughter and processing operations to Richmond in 1998.

Based in Hastings, Lowe is owned by Mr Lowe and was formerly called Lowe Walker.

Colyer Mair - formed last year as an amalgamation of Richina's New Zealand semi-processed leather operations - was the main contributor to Richina's $4.7 million profit for the year to December 31.

A combination of good quality hides and favourable exchange rates helped the division lift its turnover by 27 per cent to $138 million during the period.

Colyer Mair chief executive Stephen Randal told shareholders at Richina's annual meeting last Wednesday that the company was enjoying the best agribusiness season in 20 years and trading ahead of budget.

However, he cautioned that drought, especially on the South Island's east coast, would reduce the number of hides available next year, especially lamb, and that competitive pressures in the industry remained strong.

Colyer Mair claims to process about 20 per cent of the country's leather in an industry where the other big players are Lowe and tanneries owned by the meat processors.

Richina Pacific's website says the division collects and processes about 600,000 cattle hides a year, mainly to wet blue and some to wet salted condition, and markets these internationally.

The division, which has its headquarters in Onehunga, also runs four fellmongeries, processing about five million sheep and lamb skins to pickled pelts a year, again mainly marketed internationally.

An unspecified number of lamb pelts are also processed to the wet blue semi-processed stage.

It has assets of about $35 million. It is the oldest (dating back to 1881) and the largest leather processor in the country.

In addition to its leather processing operations, Colyer Mair holds strategic investments in some meat processing companies, from which it acquires skins and hides for processing.

Richina's other divisions in this country are Mainzeal construction and development. In China, it has Shanghai Richina Leather (which makes shoe leather) and aquarium company Blue Zoo Beijing.

If Colyer Mair is sold, it would be the second division sold by Richina Pacific this year.

In April, the company sold its Mair Venison subsidiary to NZ Deer Farms, a company associated with South Island businessman Howard Paterson, which then promptly onsold to meat processing company PPCS.

NZ Deer Farms paid Richina a little over book value of $13.5 million for Mair Venison.

The price paid by PPCS has not been disclosed.

The director of the Commerce Commission's business competition branch, Geoff Thorn, said the commission must first determine the relevant markets for the proposal and then assess the impact on the competition.

Richina's share price, which has risen in recent weeks, closed on Friday a further 4c higher at 60c.