Cavalier Wool Holdings (Cavalier) is offering to buy the assets and liabilities of New Zealand Wool Services International (WSI) for $40 million.
WSI was not taking the offer seriously until the Commerce Commission decided if Cavalier had approval for the takeover of publicly-listed WSI, which would give Cavalier a virtual monopoly
in the wool scouring industry.
Cavalier applied for clearance from the commission after it was announced a combined two-thirds stake in WSI was on the market following the receivership of two Allan Hubbard-related companies - Plum Duff and Woolpak.
WSI chairman Derek Kirke said it was not yet in a position to fully assess Cavalier's early offer.
"There is very limited detail in the offer and a significant amount of work would need to be carried out before the board could reasonably advise shareholders as to its implications and possible returns," he said.
"Until the outcome of the Cavalier application for authorisation is known and the receiver's sales process is concluded, the board is most reluctant to spend shareholder resources on fully evaluating an offer that may not in fact be authorised to proceed."
Cavalier was optimistic of commission approval for its takeover, with a preliminary decision in favour of its monopoly in light of the threat allegedly posed to the New Zealand wool scouring industry from China.
The majority of Australia's wool clip was shipped unscoured to China.
Cavalier has indicated WSI's scouring plants from Kaputone, north of Christchurch, would move to Timaru and the Whakatu operation to Cavalier's plant at Awatoto. Cavalier planned to mothball scour lines at its own Clive and Timaru plants.
