Fletcher Challenge Forests Ltd is meeting increasing resistance to its planned US$650m purchase of the assets of the failed Central North Island Forest Partnership, New Zealand.
The Guinness Peat Group (GPG) emerged this week as the latest detractor, saying the purchase price for the 163,000ha of forests was too high and did not represent the best interests of shareholders.
GPG has a stake of less than 5% in Fletcher Challenge but also controls a 19.9% stake in Rubicon, Fletcher’s biggest shareholder.
Opposition has also come from another shareholder, US forest fund Xylem, which says the deal is unfair to small shareholders and too expensive.
Fletcher Challenge needs the support of 75% of shareholders at a special meeting on August 13 for the purchase to go ahead.
The company will use US$200m from South East Asia Wood Industries Holdings Ltd to help finance the deal. The Hong Kong-based company is paying the sum for 1.108 billion shares in Fletcher Challenge, increasing its stake to 35% and making it the company’s single largest shareholder.