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 company.