Sale shadow hangs over CHH

The "for sale" sign was slung over New Zealand's fourth-largest listed company, Carter Holt Harvey, yesterday - sparking speculation that the wood products giant could be broken up.

Shares in the country's biggest forest owner closed up 14.5 per cent at $2.21 after 50.5 per cent shareholder International Paper, of the United States, said it could sell out.

It was the biggest one-day gain in six years as investors bet that a takeover bid was likely for a company worth $2.89 billion at yesterday's closing price.

The stake held by International Paper was worth $1.46 billion.

Quizzing CHH representatives, forestry analyst Stu Graham, of sharebroker UBS, speculated: "It could be that a new owner goes ahead and breaks the company up or looks to divest ... assets."

He suggested breaking up the company was also one of International Paper's options as it looked to exit.

In a telephone briefing, CHH chairman John Maasland, chief executive Peter Springford and commercial director Maree Webster deflected questions on International Paper's motives.

Maasland quoted from International Paper's statement yesterday, which expressed confidence in CHH's management and strategy. Asked "If they're so confident, why have they put you up for sale, do you think?" Maasland said he could not speak for International Paper.

Under New Zealand takeover rules, the sale of International Paper's stake in one block would require the buyer to offer to buy the rest of the company's shares.

International Paper, described as the world's largest paper and forest products company, bought 16 per cent of CHH in 1991, jumped to 26 per cent in 1994 and topped 50 per cent in 1995.

International Paper chairman John Faraci said CHH had "a great business position in Australasia" but "many aspects of our original plans for investment in CHH have changed".

Spokeswoman Jenny Boardman said it had opportunities for investing directly in the Asia-Pacific region, "primarily China", and would "move forward on our own".
Investment bank Credit Suisse First Boston and First NZ Capital are advising on the possible share sale.

CHH employs 10,500 people in a business spanning wood products, pulp, paper and packaging, and the ownership of 305,000ha of trees.

Challenges include low global prices for forest products, high shipping costs, the strong dollar - and a reputation as a serial under-performer. CHH shares returned 12 per cent including dividends over the past four years - versus the NZSX-50 index's 66 per cent.

Investment bankers said the announcement coincided with the deadline for final bids for CHH's planned sale of part of its forest estate, book value $400 million. CHH said the sale process would continue "with the full support of International Paper".

- Additional reporting: Bloomberg