Carter Holt Harvey says buying the sawn timber business of one of its North Island suppliers, Lakesawn Lumber, would cut costs and improve its efficiency.
Carter Holt, bought by New Zealand's richest man Graeme Hart last March, wants to buy Lakesawn's timber stock, customer lists, supply contracts, and
certain plant and machinery, the company said in its application to the Commerce Commission.
"From CHH's perspective, the acquisition of Lakesawn Lumber's sawn timber business is an opportunity to achieve increased economies of scale in its North Island sawn timber business, thereby reducing its operating cost base and increasing the efficiency of its operations," Carter Holt said.
Owned and controlled by Paul Pedersen and the Pedersen Commercial Trust, Lakesawn Lumber operates a sawmill at Taupo which produces structural and industrial timber.
Carter Holt has existing surplus production capacity, with sawmills at Whangarei, Kawerau, Putaruru, Kopu, Rotorua and Nelson, and would not acquire all of Lakesawn Lumber's sawn timber plant and machinery.
Pedersen will retain its core business, the provision of support services to the timber industry. It currently supplies Carter Holt with woodchip, log yard services at Kawerau, roundwood, and chipping and debarking at Kinleith.
The purchase would not significantly lessen competition because of the market's competitive and fragmented nature, excess capacity, and lack of barriers to new entry, the company said.
Pedersen said last year it wanted to be Carter Holt's preferred supplier of log yard services, its core business by default which it had first entered at the request of Carter Holt.
Pedersen will sell its sawn timber assets not wanted by Carter Holt, outside Australia and New Zealand.
Following the acquisition, Carter Holt estimated its next largest competitor in the North Island structural timber market would be privately owned Red Stag, which plans to double the capacity of its Rotorua mill to 450,000 cubic metres a year.
Lakesawn Lumber's Taupo mill has annual capacity of at least 200,000 cu m.
The Commerce Commission is due to make a decision by January 31.
- NZPA
