Cavalier Carpets plans to form a joint venture with David Ferrier to cut capacity in the wool scouring industry.
The carpet maker says there is a mismatch between the number of scouring facilities and sheep numbers, which have fallen substantially in recent years because of drought and a rise in farms being converted into dairy operations.
Ferrier has a 7.5% stake in Cavalier's commission wool scouring operations in Hawke's Bay and Timaru.
The deal requires shareholder and regulatory approval.
