Forests on course to reunite under Hancock management

The former Fletcher Challenge Forests estate - pulled apart and sold last year for $725 million - is being stitched back together again.

Hancock Timber Resource Group, of Boston, yesterday unveiled a deal to buy Prudential Timber Investments.

Under the deal, expected to close by the end of September, Hancock would take over the management of formerly PruTimber-run forests in New Zealand, the United States and Brazil. That includes 60,000ha between Tauranga and Te Kaha and near Taupo of the former Fletcher estate, owned mainly by the Ontario Teachers' Pension Plan and also by investors in a PruTimber-linked fund.

Add Hancock's management of 40,000ha of former Fletcher forests between Rotorua and the Bay of Plenty and most of the estate is back together - although in terms of management, not ownership.

The deal adds to Hancock's clout in New Zealand as the industry speculates on the likely fate of the country's largest forest owner, Carter Holt Harvey, which has a majority shareholder, International Paper, heading for the exit door.

The Business Herald revealed last month that Hancock had pulled out of the bidding for the one-third of CHH's forest estate that is on the block.

Hancock's extra scale in New Zealand could "position them more strongly for a Carter Holt break-up", speculated one investment banker yesterday.

The managing director of Hancock Natural Resource Group in Australia and New Zealand, Bruce McKnight, said: "The forest is coming back together."

However, talking of the PruTimber deal as a whole, he added: "I don't want to act like this is a done deal - because it's not."

Hancock is part of MFC Global Investment Management, an arm of Manulife Financial of Toronto. PruTimber is part of Newark, New Jersey-based Prudential Financial.

- additional reporting: agencies.