Daiken cleared to acquire Dongwha's MDF wood products

29 March 2018

Daiken cleared to acquire Dongwha's MDF wood products business

The Commerce Commission has granted clearance for Daiken New Zealand to acquire 100% of the shares in Dongwha New Zealand Limited.

Daiken, which manufactures and supplies MDF from a plant it operates in North Canterbury, sought clearance to acquire Dongwha, which manufactures and supplies MDF from a plant it operates in Southland.

In making its decision, the Commission considered competition issues in the national market for the manufacture and supply of raw MDF panels.

Deputy Chair Sue Begg said the Commission is satisfied that the merger would not substantially lessen competition in the relevant market.

“We were satisfied on the evidence before us that the market is currently delivering competitive outcomes and that the proposed acquisition is not likely to substantially change that situation,” Ms Begg said.

A public version of the written reasons for the decision will be available on the Clearances Register in the near future.

Background

Daiken
Daiken is the New Zealand subsidiary of Daiken Corporation, a Japanese company specialising in the manufacture and supply of wood-based construction materials. In New Zealand, Daiken manufactures and supplies medium density fibreboard (MDF) from a plant it operates in North Canterbury.

Dongwha
Dongwha is 80% owned by Dongwha International Co., Limited (a company incorporated in Hong Kong) and 20% owned by Laminex Group (N.Z.) Limited. In New Zealand, Dongwha manufactures and supplies MDF from a plant it operates in Southland. Its minority shareholder, Laminex (which is part of Fletcher Building Products Limited), purchases MDF from Dongwha for its own wood products business in New Zealand. Laminex also on-sells some of the MDF it purchases from Dongwha to other parties.

Merger clearance process
We will give clearance to a proposed merger only if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market. A fact sheet explaining how the Commission assesses a merger application is available on our clearances page.

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