The Commerce Commission has given clearance to Evergreen NZ Holdings (Armourguard) to acquire 100% of the shares in ACM New Zealand Limited from ACM Holdings (NZ) Limited.
Commerce Commission Chair Dr John Small said the Commission was satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
“After careful consideration of all of the relevant factors, the Commission is satisfied that the proposed acquisition is unlikely to substantially lessen competition when compared to the situation if the proposed acquisition did not proceed,” stated Dr Small.
According to a Commerce Commission statement, central to its decision was its assessment of competition in the wholesale and retail cash-in-transit services markets if the proposed acquisition were to not take place, and the competition that would be lost with the proposed acquisition.
“absent a merger, it is not likely that competition between the two large CITs would continue, and instead [it] is likely that there will be an exit from the market. We consider that a merger would be a preferable as a more orderly outcome.”
“As noted in Evergreen’s application, the relevant businesses of both Evergreen and ACM have suffered significant cash losses. An ongoing decline in the use of cash and reduced demand for cash-in-transit services – accelerated during the COVID-19 pandemic, and the rationalisation of bank branches – coupled with inflationary increases in costs makes it difficult for two national wholesale cash-in-transit providers to be financially viable. Without the proposed acquisition, we consider that it is unlikely that both Evergreen and ACM would continue to provide cash-in-transit services in New Zealand.”
Given that ACM is projected to continue to suffer losses, the Commerce Commission considered that “ACM would likely exit the relevant markets in the short term”, and on that basis it was satisfied that “there would not be a substantial loss of competition or material impact on the price and/or the quality of cash-in-transit services with the proposed acquisition.”
In a statement issued on 14 October, Armourguard Security/Logistics Ltd Chief Executive Officer, Shane O’Halloran confirmed that the Commerce Commission had granted Evergreen NZ Holdings and ACM Holdings (NZ) Ltd clearance to complete the purchase and sale of ACM NZ Limited.
On 02 April this year, Evergreen Holdings had reached an agreement to purchase ACM New Zealand Limited (ACM). The proposed sale was conditional on the approval by the Commerce Commission.
“We are pleased to see that the NZCC recognises how important consolidation of the secure cash industry is to the New Zealand economy, so that cash remains a viable and sustainable form of payment,” stated Mr O’Halloran.
“Armourguard Security and ACM will now merge both organisations’ CIT assets, liabilities, employees and operations into a newly formed and wholly owned subsidiary of Evergreen called Armourguard Logistics Ltd.
“The new entity, headed up by myself, will continue to be managed locally leveraging Armourguard’s 85 years of New Zealand security knowledge, expertise, and CIT experience,” he said. “We will continue to provide the same great level of service with the added strength of the combined knowledge and expertise of both Armourguard and ACM.”
According to Mr O’Halloran, it will be business as usual as the parties look to complete the transaction in February / March 2025.
“This is a very exciting time for Evergreen (Armourguard) and our friends at ACM. Upon completion of this transaction (and the subsequent transition period), Armourguard CIT shall be stronger, more resilient, and better positioned to service the New Zealand cash economy.”
Several submissions had been received in relation to the proposed acquisition, including a number claiming that it would stifle competition and create monopoly conditions. But in its submission, the Reserve Bank of New Zealand stated that “absent a merger, it is not likely that competition between the two large CITs would continue, and instead [it] is likely that there will be an exit from the market. We consider that a merger would be a preferable as a more orderly outcome.”
