His Woolscour Holdings bought 70% of the shares in the only scour operator, Cavalier Wool Holdings, which has scour plants at Napier and Timaru.
Australian-based Lempriere, part-owned in China, retains a 30% stake.
Ferrier has bought 15% of CWH from Lempriere, 27.5% from Cavalier Corporation, 13.75% from ACC and 13.75% from private-equity group Direct Capital.
The Auckland businessman is confident on the efficiency and international cost-competitiveness of the scours and of the future for wool and is excited to be back in the business.
His father set up wool scours in NZ and Ferrier was in partnership for a time with the Cavalier group scours as well as playing a major role in industry rationalisation involving the Godfrey Hirst scour business.
He did not expect to be an owner again.
For one thing, he had been on a long-term restraint of trade, effective until last December.
However, about a year ago, he sensed there might be an opportunity and approached the owners.
“I’d been in with Cavalier and I think they had all been through an arduous process with the Commerce Commission and that had beaten some of them down a bit so they had difficulty moving it forward.”
The commission process involved the merger of the CWH business with the scour division of NZ Wool Services International (WSI), owned at the time by Lempriere.
It took a year of talking but Ferrier persevered and ended up with what looks like a good deal for him.
The only indication of price is from Cavalier Corporation, which as an NZX-list company is subject to disclosure rules.
According to a release by NZX, Cavalier sold its 27.5% stake for $11m, as part of a $28m price paid by the Ferrier interests for the 70% stake.
As well, Cavalier owns 50% of a property leased to the scour business. ACC and Direct Capital owned the balance of the land. The price paid for the property was $3m. Cavalier said its total cash return was $13.5m.
The Cavalier stake had a June 30 book value of $25.3m so the $11.8m discount is an interesting figure given how long the parties had been talking.
Ferrier acknowledged a “good” price below book-value but said time will tell.
“It is still a lot of money and what can be a good price one day might no be so good the next day. I think it is a reasonable price.”
Cavalier was not an enthusiastic seller but its return had not been as good as hoped for.
The scour trading company Cavalier Wool Scours is now known as NZ Wool Scouring and Ferrier has brought back former Cavalier scours chief executive Nigel Hales as chief executive of the new business.
He regards Hales as the best scour company operator anywhere and says he will be backed up by a great workforce.
As well as the main Awatoto plant, NZ Wool Scouring will upgrade the group’s Clive plant to be a more effective peak period scourer.
Ferrier expects Lempriere to remain committed to its continuing 30% stake. Lempriere’s WSI wool trading business will be a major customer for the scours.
Lempriere’s Tony McKenna and Ferrier are the directors of NZ Wool Scouring.
Cavalier Corporation has already said it has entered into a long-term contract for scour services.
Chairman Alan Clarke confirmed that the company will use the sale funds to pay down debt and focus on the core manufacturing and marketing of high-end carpets.
Cavalier is confident of improving margins and achieving quality earnings, he said.
