The Forestry Corporation of NSW has shelved plans to buy Hume Forests after facing objections from the Australian Competition & Consumer Commission. Source: The Australian
The watchdog announced on 3 August that it was making market inquiries about Forestry Corp’s proposal and was inviting submissions from interested parties, with submissions closing on 17 August.
However, the ACCC updated its public register on Wednesday to say that the application had been withdrawn.
In its statement of issues on 20 October, the ACCC said it had taken the preliminary view that a proposed acquisition would likely substantially lessen competition in the supply of softwood longs in each of the Tumut-Tumbarumba and Bathurst-Oberon regions of NSW.
“The proposed acquisition will remove Hume as a significant alternative supplier of softwood logs in markets which are already highly concentrated,” the ACCC said.
It added that an acquisition could lead to higher prices or reduced service levels such as log quality delivery times for softwood logs over the long term relative to what would be the case under current or likely alternative ownership. Market experts believed earlier that the state government’s motivation for buying the plantations was likely to be that it had lost its own plantations across about 50,000ha during the NSW bushfires almost two years ago.
It needed to find wood source to honour contracts with customers. These could be groups such as packaging company Visy or timber manufacturer Hyne & Son.
Hume, which is overseen by Global Forest Partners, holds softwood plantations located between the Tumut-Tumbarumba and Bathurst-Oberon regions of NSW.
They comprise about 19,000ha of freehold land with a net plantation area of about 14,000ha and have been up for sale through corporate finance advisers Resolute Advisory.
The asset was expected to fetch a price of close to $200m, judging from analyst estimates.
The plantations were inherited by Global Forest Partners from the liquation of Willmott Forests about 2010.
The average age of the plantation is about 10 years, and it is in its second rotation.
Hume Forests is expected to produce steady returns from a harvest of about 80,000 cubic metres a year.
