Carter Holt Harvey shopping after tissue sale

By PAM GRAHAM

Packaging businesses in Australia and New Zealand and small investments in China are on Carter Holt Harvey's shopping list after selling its tissue business.

The obvious candidate is Amcor's cartonboard business in Australia, which Carter Holt could supply with its own pulp, say analysts. They think it is an option Carter Holt has already been exploring.

"I don't think that's something I want to talk about," said Carter Holt chief executive Peter Springford. "We're interested in packaging in Australia and New Zealand."

Carter Holt last week announced the sale of its tissue business to Swedish company Svenska Cellulosa for $1.015 billion and the return of $450 million of capital to shareholders.

The sale takes away 15 per cent of revenue and one of Carter Holt's more profitable units.

Carter Holt went as far as preparing a draft prospectus for a public share float of tissue and had some directors signed up.

Springfield said test marketing suggested the IPO could deliver an attractive price but the trade sale was faster, cleaner and had lower costs.

Carter Holt has also said it is interested in assets owned by Tenon, the renamed Fletcher Challenge Forests, but Tenon has said they are not for sale.

Carter Holt and Norske Skog are suing Tenon, arguing it should still own forests to meet perpetual wood supply contracts.

The companies have talked, but all Carter Holt would say last week was that the talks were progressing.

Many in the industry wonder if Carter Holt will also sell forests and it is expected to have something to say about forests by the third quarter.

Springford said the company had low debt and generated strong cash flows.

Carter Holt was not signalling a Fletcher-style breakup. It was looking for opportunities in its core competencies and would be patient and disciplined.

Carter Holt sees itself as an astute buyer and seller of businesses.

It has found some bargains in Australia by buying plants with operational problems it could correct or that offered synergies with its existing businesses.

It sold tissue at 8.4 times earnings, well above analysts expectations.

Amcor, the old Australian Paper Manufacturers business, demerged its pulp business as Paperlinx in 2000 and has been expanding globally in plastic and glass packaging.

Its Petrie Mill manufactures cartonboard in Australia and it owns small corrugated box plants in Christchurch, Hastings and Auckland.

Amcor's only major cartonboard competitor is Visy, the company owned by Australian businessman Richard Pratt.