Local authority-owned City Forests Ltd (CFL) today issued a $12.6 million conditional takeover offer for Opio Forestry Fund (OFF).
CFL, a unit of Dunedin City Council, has made an 85c a share offer to acquire a majority stake on OFF.
The offer was conditional on CFL building up a 75 per centstake.
Shares in OFF have been placed in a trading halt, it said in a statement to the sharemarket today.
OFF has advised its unit holders not to sell their units "pending communication from Perpetual Trust Limited as trustee."
CFL currently manages 15,300ha of forests in the Otago region.
Chief executive Phil Taylor said the offer price was at a "very attractive premium" on market prices.
The offer price was 46.6 per cent higher than the closing price of OFF shares yesterday.
"The offer... provides unit holders with an opportunity to realise their investment for cash now, removing the uncertainty of future returns," Mr Taylor said.
"Certainly, the forestry sector is currently facing a number of significant challenges that may have negative implications on the future value realised from Opio's forest crop."
OFF has not paid a dividend and was unlikely to declare a distribution to shareholders until harvesting began, Mr Taylor said.
OFF has 14.9 million shares on issue. CFL's offer closes on September 3.
OFF shares last traded at 58c each on July 30, having ranged between 48c and 60c in the past year.
