Carter Holt seeks approval to buy Tenon sawmills

10.00am

Carter Holt Harvey today applied for Commerce Commission approval to buy Tenon's "structural" sawmill assets that are being considered for sale.

"The application has been made to provide Carter Holt Harvey with flexibility to explore whether Tenon's recently announced strategic review of its structural solutions business offers an opportunity for investment," the company said in a statement.

In September, following weeks of speculation, wood processor Tenon said it was reviewing its sawmill assets for potential sale,

The mills, big employers in small towns throughout the central North Island, were valued between $123 million and $144 million by Grant Samuel in May.

Carter Holt is considered a top contender among potential buyers.

A spokeswoman for Carter Holt noted that Tenon had not yet decided if it wanted to sell the sawmills.

"They are keeping their options open, so we are keeping our options open but we can't say we are going to buy them or that we are in a sales process because that is not correct." Last week, Tenon said it received "a number of formal proposals" for the assets. Tenon expects the outcome of the review to be known by the time of its annual meeting December 22.

Carter Holt Harvey is seen as the trade buyer that can extract the biggest gains by putting the mills together with its forests and other processing businesses, but it is not known for overpaying.

Tenon is controlled by Rubicon, regarded as a canny vendor, and is chaired by experienced Guinness Peat Group director Tony Gibbs.

Up to seven private equity and trade buyers are believed to be checking out the assets.

There was speculation that a joint venture which allowed Tenon to retain some ownership while extracting synergies by running the assets together with another player was being considered as well as a straight sale.

A tie-up to a company with a distribution chain into the building industry was also an option.

The decision to review the sawmills, which supply timber framing to the local building industry, came after unsolicited approaches were received.

Tenon is the business left over after Fletcher Challenge Forests sold its forests.

Forest industry observers see the sale as another step in a consolidation in the forestry industry and wonder whether wood supply to the mills will become an issue for buyers as they progress due diligence.

Harvests have been cut to rebuild forests in the central North Island after they were overcut.

- NZPA