Article – BusinessDesk
Wednesday 30 November 2016 10:50 AM
Cavalier shares halted pending Appeal Court judgment on wool scour merger
By Tina Morrison
Nov. 30 (BusinessDesk) – Cavalier Corp shares were halted from trading as the New Zealand carpet maker awaits the outcome of an appeal against a High Court ruling which gave the green light to the merger of its wool scouring operations.
A judgment on the appeal by rival carpet maker Godfrey Hirst is due today and Cavalier has requested its stock be halted from trading to allow it to consider the implications and prepare its response, the Auckland-based company said in a statement. The shares closed yesterday at 73 cents, having gained 20 percent this year.
Australia’s Godfrey Hirst wants to overturn the regulatory approval letting Cavalier’s 50-percent owned Cavalier Wool Holdings buy New Zealand Wool Services International’s wool scouring business and assets, arguing that an earlier ruling was mistaken in agreeing with the Commerce Commission’s treatment of productivity gains flowing to foreign shareholders.
The transaction was allowed because while the commission found it would give the wool scourer a monopoly on the supply of wool scouring services and the supply of wool grease and be able to raise its prices, there was a broader public benefit in fending off competition from cheaper foreign rivals.
The scouring merger has been on hold pending the outcome of the appeal.