Proposed merger biggest in N.Z. company history

Press, 1 April 1980, Page 1

Proposed merger biggest in N.Z. company history

By

ADRIAN BROKKING,

commercial editor

In a move of major significance to the future development of the fishing and timber industries of New Zealand, Fletcher Holdings, Ltd, announced yesterday that it had proposed a merger to Carter Holt Holdings, Ltd. The transaction, the biggest take-over in New Zealand company history, would be effected by Fletcher’s offering to acquire all the issued shares of Carter Holt. It would create New Zealand’s second-largest company in terms of funds, and probably the largest in terms of profit. The deal is worth about $43 million, of which about $ll.B million would be in Fletcher shares, and almost $31.2M in cash, At last balance date ■ the shareholders’ funds of Carter Holt — its “net worth” — stood in the books at $55.8 million. The deal values Carter Holt at $56.4 million, as Fletchers already owns 23.6 per cent of the Carter shares. Carter Holt — itself the result of a merger of two sawmillers and builders’ merchants eight years ago •— has extensive forest interests and huge export contracts with Japan of wood pulp and sawn timber; it has considerable interests in fishing through a majority shareholding in the Sealord companies, of Nelson; Carter Holt also

owns Sharland and Company,. the pharmaceutical, cosmetics, and food manufacturer, but has recently divested itself of many of the Sharland interests.

Fletcher Holdings, Ltd, is one of New Zealand’s industrial giants, which expects a turnover of about $6OO million this year, and a net profit last year of almost SI7M.

Carter’s latest profit was SSM, 19 per cent lower than the 1978 profit of $6.3M, from sales of SIO7M, including S32M from exports. A merged grouping of Fletchers and Carter Holt therefore might have sales of more than $7OO million, and a combined profitmuch more difficult to estimate—perhaps .as high as S3SM. New Zealand’s largest company, N.Z. Forest Products, Ltd, earned just on S23M last year.

Fletchers says that it strongly believes that the proposed merger is in the best interests of Carter Holt, its shareholders and employees, and in the best interests of New Zealand, because the merged company would have greater ability ,to develop New Zealand resources.

The jenlarged group—entirely New Zealandowned and managed, with a greater earnings base would be better able to promote major new industrial projects in their initial years.

Fletchers also point out

that; both companies have a Sawmill in. South Auckland, c and, that,if jthe./merger /eventuates, the 'resulting;' group will propose to the. New Zealand Forest Service a pulp mill to use these sawmill residues and pulpwood rinsings.' Both companies have interests in building materials merchandising; these require extensive modifications 'to adjust to the /move from new residential to home improve-.' merits; - and the merged company will be/.better placed financially and managerially to make these changes with better economies and customer service.

Both companies are already heavily involved in exports. “The combined group will have greater strength arid ability to achieve export growththan the two companies acting individually,’ l Fletcher’s says.

In the recently issued prospectus for a $5 million debenture issue, the chairman (Sir James Fletcher) says that the present financial year has been a good one and that profit should again be a record. The Fletcher group has been gearing itself to play a major role in the expansion of the economy in the 1980 s. It has been active in seeking equity participation in major projects in exports and energy. Fletchers says that there will be no redundancies as a result of the merger,