Reservation about take-over of McKenzies

Press, 2 August 1979, Page 2

Reservation about take-over of McKenzies

PA Wellington L. D. Nathan and Company, Ltd, which wants to take over McKenzies (N.Z.), Ltd, has been advised by the Examiner of Commercial Practices (Mr A. E. Monaghan) that in his provisional view, the take-over may be against the public interest. Mr Monaghan has given the company another three weeks to provide evidence on the benefits of the takeover. The examiner has the power to approve the takeover, but he cannot say “no.” If he is against the proposal, he must refer the take-over to a higher authority, in this case the Commerce Commission, for a final decision. The chairman of McKenzies (Mr H. W. Huse) has criticised Mr Monaghan’s decision “for adding further uncertainty to the take-over as far as staff are concerned.” Mr Huse’s board had already agreed to the takeover going ahead, unless a

better bid appeared, which has not happened, and 64 per cent of the shareholders of McKenzies have accepted the L. D. Nathan offer. Mr Monaghan’s objections centre on the public interest sections of the Commerce Act. Briefly, Section 21 says that a take-over cannot go ahead if it increases costs of production or maintains them at higher levels, if it prevents lower costs, if it causes profits to be maintained at a higher level than before, or if it reduces or limits the range of goods available. Section 80 covers the effect of mergers on consumers, the better use of labour resources, and the interests of the employees of the company being acquired. The Shop Employees’ Association yesterday welcomed the reservation expressed by the Examiner of Trade Practices about the proposed take-over. The association’s industrial officer (Mr R. Campbell) said it was to be hoped that .the management of Nathans “would not be able to talk its way out of a public inquiry?”