LWR deal given go-ahead

By Dita De Boni

The Commerce Commission has cleared the New Zealand arm of Pacific Dunlop Holdings to acquire several businesses of New Zealand's largest clothing maker, LWR Industries.

The cost of the acquisition, to be completed in the next few days, has not been disclosed, although the Business Herald understands the figure exceeds $12.6 million.

After losing the hosiery and underwear division, LWR will be left with its two larger divisions: Canterbury International Group, the company's main active/leisurewear operation, and the manufacturing and outerwear group, encompassing knitting, dyeing and finishing.

Commission chairman John Belgrave said he was satisfied that if the acquisition went ahead, Pacific Dunlop Holdings (NZ) would not acquire or strengthen a dominant position in any of the seven apparel markets LWR's hosiery division operates in.

Although in three markets - men's underwear, thermal underwear and adult socks - the combined operation would have a market share of more than 40 per cent (the "safe harbour" laid down by the commission), it would be constrained by the ability of existing competitors to expand, Mr Belgrave said.

Pacific Dunlop (NZ), a unit of Melbourne-based Pacific Dunlop Ltd, will also take LWR's women's underwear, bras and pantyhose and children's socks businesses, although market share of those products will remain under 40 per cent.

Pacific Dunlop is a diversified manufacturer whose key division is the Ansell protective gloves and condom business.

General manager of corporate affairs, John Hine, said there would be "no change" in the LWR operation.

Speaking from Melbourne, he said there would be no job losses among LWR's 200-plus staff after the acquisition.

Pacific Dunlop is listed on the Australian Stock Exchange and with a steadily declining share price from almost $A3 ($3.80) last March to $A1.54 last month, has been rumoured to be under the spectre of a takeover itself.

US investment concern Shamrock Holdings, which owns a 1.4 per cent holding in the company, has indicated it would boost its stake to 15 per cent within the year.

LWR was the subject of a bidding battle in 1997 when Brierley Investments indicated it would divest its 65 per cent holding as it did not fit its core portfolio of investments.

Last September, the company was compulsorily acquired by investment consortium CHL New Zealand, headed by multi-millionaire David Teece.