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Cavalier shares halted ahead of ruling

NZ Newswire logoNZ Newswire 29/11/2016 Tina Morrison

Cavalier Corp shares have been halted from trading as the 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 on Wednesday and Cavalier has requested its stock be halted from trading to allow it to consider the implications and prepare its response, it said. The shares closed on Tuesday at 73 cents, having gained 20 per cent this year.

Australia's Godfrey Hirst wants to overturn the regulatory approval letting Cavalier's 50-per cent owned Cavalier Wool Holdings buy New Zealand Wool Services International's wool scouring business and assets.

It argues 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.

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