KEY POINTS:
Shares in wood products firm Tenon rose 3.5 per cent yesterday after it announced it was to offload its 50 per cent stake in American Wood Mouldings (AWM) and buy another company.
Tenon believed the deal would add more than 75c per share of value to the stock.
Tenon has sold its AWM investment to its AWM partner, the Hagen family, for half of Ornamental Mouldings. The other half of the mouldings company was acquired for US$18.75 ($28.19) million.
The deal assumes Ornamental's "small" net internal debt balance of US$3 million.
Tenon said its pro-rata share of AWM's debt was approximately US$21 million.
Tenon chairman Luke Moriarty said that the Ornamental purchase was a "very positive and highly significant move for Tenon".
Tenon was in control of the total company, which had not been the case with AWM.
Earnings-wise, he said AWM had also contributed "next-to-nothing" to Tenon's bottom line last year, whereas Ornamental's operating earnings last year were more than US$7 million.
Chief executive Mark Eglinton said the transaction addressed the source of the company's disappointing first half result.
In the second half, Tenon more than doubled its first-half earnings performance from US$6 million to US$14 million. Total earnings for the year were US$20 million before interest, tax, depreciation and amortisation.
Tenon retained an agreement with AWM to supply mouldings from its Taupo site.
Shares in Tenon rose 11c to $3.21.
- NZPA
