N.Z.F.P., U.E.B. in talks

Press, 7 May 1980, Page 22

N.Z.F.P., U.E.B. in talks

The country’s largest company, N.Z. Forest Products, Ltd, is having merger talks with U.E.B. Industries, Ltd. This announcement came after a statement to the Stock Exchange Association by UEB which said that the company had received “intimation of a possible offer for shares in U.E.B. Industries from a third party.’’ U.E.B. also issued a “don’t sell” warning. Sales of U.E.B. shares yesterday, presumably to the new buyer, were 107 c, 106 c, 105 c for the ordinaries. The U.E.B. directors were meet-1 ing in Wellington yesterday — a day ahead of their' scheduled meeting. j It seems likely that the' two companies would only' merge packaging and paper interests, and that U.E.B.’s carpet manufacture and tourism divisions would be excluded. The Auckland sharebroking firm which on Monday made an offer for seven million U.E.B. shares has so far bought about five million ' and expected to complete its , purchases last night. Mr Charles Bidwill,' of : Bidwill, Wakeman, Paine and ' Company, said that most of i

•[the shares obtained so far .’were ordinaries and 12 per i'cent specified preference shares. About one million . were , the new 15 per cent i specified preference shares, which are being traded “in J the vestibule” in Auckland i at the offer price of 50c. • ' The identity of the buyer , will probably be known today, but opinion that Caxton Paper Mills and its associated interests are involved was unanimous and widespread. The managing director of U.E.B. (Mr G. R. J. Tedjcastle) said: “We understand: jthe Spencer family is buyling.” The Spencer family [owns the Caxton Mills and (associated printing group, j Mr Tedcastle said that the Caxton paper interests could be described as a monopoly. The move to buy into U.E.8., he said, was obviously a reaction to U.E.B.’s announcement in February that it planned a $27 million plant to make lightweight grades of paper. These grades would compete directly with some of Cax- ■ ton’s products. N.Z. Forest Products already has an interest in U.E.B. — it owns 2.2 per > cent of U.E.B.’s ordinary i

■ shares. Forest Products -is also a major maker of : paper. Whether by design or ac- : cident, Caxton Paper Mills restricts its production of papers to weights below 40 . grammes a square metre, and Forest Products makes ’ only paper above 45 grammes. . Caxton, a private . company, has not disclosed details of its production. It has«a paper mill at Kawerau and a printing works at Henderson. The mill is understood to 'produce groundwood pulp and lightweight papers from three machines. Capacity is said to be about 45,000 to 50.000 tonnes a year. The move to accumulate a substantial minority interest! in U.E.8., if Caxton proves to be the buyer, was seen as a prerequisite to establishing a position from which to observe, if not influence or participate in, the future turn of events. Observers said even a substantial shareholding on its own would not be sufficient to achieve that end and that another move, to either be associated with the U.E.B. development or block it, seemed necessary.