THE Australian Competition and Consumer Commission has held up the sale of Joyce Corporation’s foam business to Pacific Brands until at least next month.
Pacific Brands offered to buy the foam business from Joyce for at least $18.5 million late last year.
If the sale proceeds, Joyce will be left with the cash from the sale plus a 49 per cent share in bedding and bedroom furniture franchise Bedshed.
Shareholders still have to sign off on the foam business sale and an extraordinary general meeting will be held in February.
A release by the ACCC says the commission has identified “significant competition issues that are likely to result from the proposed acquisition”.
The commission is allowing interested parties until February 4 to make further comments before making a decision on the deal.
Several industry participants have already made submissions to the commission.
Pacific Brands offered to buy the foam business and freehold land and buildings owned by Joyce for $32.5 million “less the book value of the freehold land and buildings not acquired”.
Joyce chairman Dan Smetana told WA Business News the company’s land holdings were worth $14 million.
He said he had been advised by Freehills, the lawyers advising Joyce on the ACCC investigation of the Pacific Brands deal, that the commission-imposed delay was normal.
“If they [the ACCC] refuse the sale, we’ll just go back to where we were,” Mr Smetana said.
“But the realities are, even the ACCC’s boss [Federal Treasurer] Peter Costello has said the manufacturing industry in Australia is in a dire situation.”
Mr Smetana said if the sale went through Joyce would “take a very sober breath and have a look at what our options are”.
Bedshed, which Joyce started about 25 years ago, has about 30 stores around Australia and growing that business looms as a major option.
“The exercise will be to talk to the Bedshed board and say ‘if we had an open cheque book, what would we do to grow the business?’ and then match it,” Mr Smetana said.
“If there are no investments then we’ll do something about giving the money from the sale back to shareholders.
“We’ve already said the shareholders will get 20 cents to 25 cents a share back.”
Besides Joyce’s 49 per cent share in Bedshed, BLP _ the vehicle of a group of private investors _ holds 46 per cent and Bedshed boss Mike Smart owns 5 per cent.
Mr Smetana said he held a majority holding in the BLP stake and was also the chairman of Bedshed.
He said Joyce would move to increase its holding in Bedshed.
“We wouldn’t want to start putting money into something we don’t fully control,” Mr Smetana said.
“It will also give the existing BLP shareholders a chance to exit.”
Joyce Corporation has been on the improve since what market watchers called a near-death experience about four years ago.
The company overcame its difficulties, trimming off all but its foam business and its share in Bed Shed.