A transformed Tenon has no plans to return more cash or reinstate dividends to shareholders as it hunts for more investments.
The wood products company said yesterday that its newly acquired subsidiary, The Empire Co, had bought 51 per cent of Southwest Moulding, a Texas-based moulding and millwork distributor, for about US$16 million ($23.49 million).
It has an option to acquire the rest, which it fully expects to take up.
Chairman Luke Moriarty told the annual meeting in Wellington that the former Fletcher Forests had plans for more investments of the nature of Southwest.
The company plans to acquire scale to lower cost base and widen its US distribution network.
"We believe more value will be created through controlled growth of the Southwest type than from simply returning further capital," Moriarty said.
The company, which has returned $670 million to shareholders in the past couple of years, believes the balance is firmly in favour of retaining capital for growth.
Moriarty said the battering Tenon's shares had taken since announcing a profit downgrade on Tuesday was short term.
The shares dropped from $3.80 to $3.60 this week.
The company now projects to earn only US$5 million ($7.3 million) in the first half as a result of a "convergence of negative factors" - freight increases, cost increases, poorer prices.
Incorporated in 1952, Southwest makes stair parts and exterior doorframes, and distributes mouldings and other related millwork products.
The firm employs 120 people and its head office is located in Dallas.
Tenon moved to full ownership of Empire in September.
- NZPA
Tenon to put cash into growth
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