New Zealand forestry company Carter Holt Harvey could face the prospect of being broken up following the planned sale of International Paper‘s controlling stake in the firm, according to investors.
The possibility of break-up is being mooted because Carter Holt’s assets are worth more than the company’s market value.
International Paper is selling its 50.5% stake to concentrate on more profitable markets such as China. Carter Holt itself is to sell a third of its New Zealand forests in a move which could determine whether any buyer of the controlling stake may sell off other assets.
Carter Holt’s forests business accounted for 38% of the company’s NZ$5.6bn of assets in 2004. The biggest business division was wood products, which made up 52% or NZ$1.88bn of total revenue.
But wood products earnings dropped in the first quarter as a decline in Australian housebuilding boosted timber stockpiles. The company expects full-year operating profits to match last year’s NZ$300m, as long as housebuilding picks up.
