CHH divests its Tissue and Sancella businesses
Carter Holt Harvey divests its Tissue and Sancella businesses to an international paper company, SCA
Carter Holt Harvey Limited (CHH) today announced it has entered into an agreement to sell its Tissue business and its 50 per cent interest in Sancella to an international paper company, Svenska Cellulosa Aktiebolaget (SCA) for NZ$1,015 billion (AUD$890 m). The agreement is conditional on normal regulatory consents from the Overseas Investment Commission (OIC) and Foreign Investment Review Board (FIRB), with the sale completion date expected to be effective mid May.
The agreement comes after CHH’s November 2003 announcement to explore alternatives for its Tissue business which comprises the Consumer Brands, Experko and Treasures Babycare businesses. The agreement also includes Sancella, a joint venture which manufactures and markets the successful Libra and TENA brands.
CHH Chief Executive Officer, Peter Springford said a key driver for the decision was maximising shareholder value and finding the right ownership option for Tissue. “From the outset we recognised CHH Tissue was a well positioned and maintained business with exceptional brands and a strong market presence. We are delighted with the outcome and the opportunities the new owner can provide CHH Tissue and Sancella employees.
“With a strong international focus in the hygiene products market, SCA has the capacity and resources to develop the offerings of the Tissue and Sancella businesses, helping these businesses to further realise their potential. For SCA, the acquisition delivers strong synergies and value by building on their presence in the important Australasian market,” Mr Springford said.
CHH is in a very strong financial position with a debt to total capitalisation ratio of better than 20 per cent. Taking into account the optimal capital structure and future cash flow, CHH has decided it will distribute approximately half the proceeds but in any event not less than NZ$450 million (AUD$385 million) by way of share buy back, pro rata to all shareholders.
It is anticipated the buy back will take place in CHH’s third quarter, following shareholder approval and the receipt of confirmation from the Inland Revenue Department that the capital return is not a taxable dividend.
SCA President and CEO, Jan Åström said the acquisition was an important step in SCA’s long term strategy.
“We are keen to establish a presence in this market as part of our long term strategy to grow our hygiene products business outside of Europe and North America. The Tissue and Sancella acquisitions will provide a strong basis for this growth and assist SCA to increase its global presence.”
Tissue Chief Operating Officer, Don Matthews will lead SCA Hygiene Australasia as President.
“This is an exciting opportunity for all our Tissue and Sancella employees. As SCA has worked with the Sancella business for the past 25 years (8 years as joint venture partner with CHH), there is already a high level of mutual respect between our organisations. SCA’s hygiene products focus will provide the Tissue and Sancella businesses with benefits and opportunities which may not have been possible under CHH. Its similar culture and commitment to quality and service is an excellent fit for Tissue and Sancella,” Mr Matthews said.
CHH will now focus
on its investment in pulp, paper, packaging and wood
processing, supported by forests, to consolidate its
position as Australasia’s leading wood-fibre processing