Hart tipped to be sizing up Amcor

Speculation is mounting in Australia that New Zealand's wealthiest man Graeme Hart wants to buy part, or all, of packaging group Amcor.

In The Australian newspaper today, columnist Michael West said Mr Hart most wanted Amcor's A$700 million ($844 million) fibre packaging business.

Carter Holt's lining board plant in New Zealand was struggling, its margins carved to bits by low-cost competitors in the Asian market, Mr West said. Were it to combine with Amcor's corrugated-box operations, however, it would deliver the scale and value-added corrugated-box product to turn the business around.

"We're talking synergy gains of A$300 million-plus," he said.

In February, Amcor said it would sell its non-core businesses worth around A$400 million.

The column said if Mr Hart could not prise out the parts of Amcor he wants, he could launch a hostile bid, which would cost him around A$7 billion. Macquarie Equities estimates Amcor's break-up value at A$7.55 billion.

Mr Hart bought Carter Holt earlier this year through his private company Rank for $3.4 billion.

Mr Hart has around $3 billion available in his 54 per cent controlled, cashed-up Australian listed company Burns Philp.

As well, Carter Holt is reported to have the bulk of its $1.5 billion forest estate on the block.

West estimates Mr Hart could lay his hands on A$10 billion if needed and there was "no shortage of bankers pandering to finance the savvy entrepreneur's next corporate play".

Mr Hart was unlikely to have problems with the Australian Competition and Consumer Commission as Carter Holt has only about 5 per cent of the Australian packaging market which is 90 per cent controlled by Amcor and Dick Pratt's Visy Group.

Mr West said Amcor made far more sense as a takeover target than Telecom, which has been cited as in Mr Hart's sights.

Amcor is seen vulnerable to counter-cyclical buyers but Mr Hart could be in competition with the plethora of private equity firms looking for targets.

It has failed to extract value from its A$2.9 billion German acquisition of Schmalbach Lubeca four years ago.

However, Amcor could provide a buyer with A$1 billion in cash flow.

In the past year, Mr Hart has completed a series of rapid-fire deals involving asset swaps with Fonterra, purchase of CHH, the float Australasian food group Goodman Fielder and liquidation of Burns Philp's last remaining asset, Uncle Tobys, for $1.1 billion.

Other than the forests, Carter Holt owns pulp and paper mills at Kawerau, Kinleith, Whakatane and Auckland; sawmills in the upper North Island, Nelson and Australia; packaging plants in New Zealand and Australia and panel and plywood mills in New Zealand, Australia and China.

Aspect Huntley analyst Howard Tweedie said there had been a woeful lack of consolidation in the paper industry and he counted on Mr Hart to lead a rationalisation in the wake of his acquisition of Carter Holt.

- NZPA