New Zealand's richest man, Graeme Hart, looks to have snapped up another bargain with the acquisition of the Australian arm of United States timber producer Weyerhaeuser.
Carter Holt Harvey, owned by Hart's Rank Group, announced the buy yesterday without disclosing a price.
It is likely Hart would havestruck a tough deal with the US company, which has been closing down mills in North America and selling off non-core assets on the back of the US housing market downturn.
The purchase was a major turnaround for the Carter Holt which has had its own wood processing assets on the market.
The acquisition, which has yet to gain Australian regulatory approval, would include the timber manufacturing and distribution operations of the Weyerhaeuser Australian Group, including the interest of Green Triangle Forest Products.
First New Zealand Capital analyst Andrew Mortimer said the deal was a surprise given the Carter Holt assets had been up for sale. But it made sense in terms of the softwood market in Australia. "The deal would consolidate about 35 per cent of the market."
Carter Holt already has about 20 per cent of the market. Weyerhaeuser has a further 15 to 20 per cent of it.
The privately owned Hyne business, which has a further 20 per cent of the market, is also up for sale.
Mortimer said consolidation was needed as there were just "too many players" in the market.
Weyerhaeuser this year reported a first-quarter loss of US$148 million ($193.4 million), worse than analyst predictions, after net sales fell 24 per cent to US$3.39 billion from US$4.5 billion a year ago.
Last year Hart, who Forbes values at US$5.1 billion, put Carter Holt Harvey's wood product and distribution business on the market for an estimated $2 billion to $2.5 billion but struggled to find a buyer.
Japan's Sumimoto Forestry Company applied to buy some of the assets but was turned down by the Commerce Commission in March.
Yesterday Rank Group said the chance to buy the Australian business had come up through a review of its building supplies business.
"CHH has determined that the combination of the Weyerhaeuser Australia businesses with its own CHH Woodproducts Australia business represents the best immediate strategic step in improving the combined business."
A spokeswoman for Carter Holt Harvey said it hoped to finalise the acquisition by September.
