Pulp mill cleared for CHH purchase

By ELLEN READ Manufacturing writer

Carter Holt Harvey has won approval to buy Norske Skog's Tasman pulp mill, but is still not revealing whether it intends to do so.

After several delays, the Commerce Commission yesterday approved Carter Holt's application to acquire the Tasman mill kraft pulp processing assets owned by Norwegian forestry giant Norske Skog.

"The Commerce Commission decision is an important step and one that we are pleased to have behind us," Carter Holt spokeswoman Dellwyn Stuart said last night.

She would not comment on whether the company planned to make an offer for the pulp mill, saying that that information was commercially sensitive.

Carter Holt owns the only other supplier of kraft pulp in New Zealand - the Kinleith mill - and the Commerce Commission said that although the purchase of the Tasman pulp mill, if made, would give the company large market shares in pulp-related markets, it was satisfied that this would not equate to market dominance.

Interviews with 13 major companies in the affected markets - independent sawmills and downstream users including users of packaging materials - helped it reach this conclusion.

"Pulp products are traded internationally in large quantities.

"In general terms, the factors preventing dominance in New Zealand are the ability of Carter Holt Harvey customers to import products, the ability of Carter Holt Harvey suppliers to export products and, in some markets, the countervailing power of customers or suppliers," the commission said.

Full details of the decision will be available by the end of this week.

The mill, which analysts have previously said might sell for $330 million to $550 million, was acquired by Norske Skog last year as part of its purchase of Fletcher Challenge Paper.

Norske Skog said before Christmas that it planned to sell the Tasman pulp mill and retain the Tasman paper mill - which fits better with its focus on magazine and publication papers.

Norske Skog has not indicated what price it hopes to get or which parties may be interested.

But an announcement is likely to be made by the end of this month.

Carter Holt has previously said it could achieve significant savings by buying the Tasman pulp mill, but that it would not pay more than fair value.

"What directors would have to be comfortable with is that the returns represent a good use of capital," investor relations manager Jim Whineray told Dow Jones last month.

Mr Whineray said then that adding the Tasman mill's annual capacity - about 255,000 tonnes - to existing output from the group's nearby Kinleith mill would give Carter Holt the ability to be more "cost competitive."

The commission's decision came after the stock market had closed for the day.

Carter Holt Harvey shares ended Tuesday trade up 1c at $1.97.