CHH split would boost value

The value of New Zealand's fourth-largest listed company, Carter Holt Harvey, could be boosted by 25c to 40c a share by breaking it into pieces.

Sharemarket analysts have done their numbers after 50.5 per cent shareholder International Paper, of the United States, flagged on Monday the possible sale of its stake in the wood products giant..

International Paper expects to conclude a sale before the end of the year.

A research note from sharebroker Goldman Sachs JBWere said the break-up value of the company could be $2.45 a share - or 25c more than the value that it puts on an intact CHH.

It said the dispassionate approach of "financial buyers" - entities such as private equity funds - coupled with opportunities for "financial engineering" could unlock the extra value. It sees most of the extra value in the company's forests.

Long-term investors such as Harvard University's endowment fund and so-called Timos - timber industry management organisations - have figured in some of New Zealand's biggest forestry deals this decade.

A report from Macquarie Equities predicted International Paper's sale would lead to the sale of all of CHH.

It said bidders could include three trade players: Weyerhaeuser (United States), Sodra Skog (Sweden) and Stora Enso (Finland). Weyerhaeuser already owns trees in New Zealand.

The report also said Macquarie "did not discount a consortia bid by parties who may be interested in only parts of the business".

It suggested $2.47 a share as a "crude" estimate of what CHH could be worth to a buyer.

That is 26c a share more than Macquarie's intact valuation.

Another sharebroker, ABN Amro, came up with a break-up valuation of $2.70 a share - 40c a share more than if the company is in one piece.

Under New Zealand takeover rules, any buyer of all of International Paper's stake would have to offer to buy the rest of the company's shares.

* International Paper yesterday warned second-quarter earnings could be more than 30 per cent below Wall St forecasts after weak sales of industrial packaging and printing paper and high energy and raw material costs.