Oji Holdings cleared to acquire CHH Pulp & Paper
Japan's Oji Holdings Corp has been granted antitrust approval to acquire Carter Holt Harvey's pulp, paper and packaging businesses from billionaire Graeme Hart.
The $1.04 billion deal will be one of the largest single Japanese investments in the New Zealand economy. Tokyo Stock Exchange-listed packaging giant Oji will take a 60 percent share of CHH's PPP assets, comprising some of New Zealand's largest industrial energy and forest products users, the Tasman and Kinleith pulp and paper mills, and a large Australasian packaging enterprise. Oji already owns the Pan Pac pulp and paper mill, near Napier.
Innovation Network Corp of Japan, a government-backed innovation agency that attracts private sector investment to "promote innovation and enhance the value of businesses in Japan", makes up the remaining 40 percent joint venture vehicle that will make the investment. Oji and Innovation will own the assets through a holding company.
The deal needed Commerce Commission approval because Oji also owns forests, a saw mill and a pulp mill in Hawke's Bay via Pan Pac Forest Products.
"Oji's mechanical pulp mill and Carter Holt Harvey's kraft pulp mills produce different types of pulp so the merger is unlikely to result in any change to the competitive situation in respect of the supply of pulp," said commissions chairman Mark Berry.
The regulator said it also considered the impact of the deal on markets in which Oji and Carter Holt Harvey buy pulp logs and wood chips for their pulp mills and said some suppliers "could lose a competing buyer as a result of the merger," raising the prospect Oji could then depress the price it pays.
"However, the Commission considers that as pulp logs are a by-product of saw logs, the quantity of pulp logs produced is driven largely by the price of saw logs," Berry said. "While the removal of a potential competing buyer for wood chips may lead to a decrease in the prices Oji pays affected suppliers, it is unlikely to lead to a reduction in wood chip output because Oji requires the chips from all of its suppliers to enable its pulp mill to run at capacity."
CHH is 100 percent-owned by Hart, who in turn owns the world's largest packaging business, US-based Reynolds Group.