Photo: ULK sawmill / Lesprom Network
New Zealand’s Fletcher Building Limited has agreed to acquire Waipapa Pine Limited and Renewable Wood Fuels Limited (together, “Waipapa”) for a consideration of approximately $97 million, including land and buildings but excluding earn out.
Waipapa produces a range of sawn timber products, including industrial and structural grades, and includes a renewable fuels business. It is geographically advantaged by being in Kerikeri (sawmill) and Whangarei (timber treatment plant), close to the supply of high-quality logs and servicing its highly valued customers from the Far North to Hamilton. Fletcher Building intends to continue to serve these customers and expand production capability to strengthen Waipapa’s ability to support the market.
The Waipapa business is well-run and is testament to the vendors’ commitment to the business over the last ten years. Waipapa forecasts revenue of $50 million and EBIT of $14.5 million for the 12 months ended 31 December 2022. It is expected to generate mid-cycle EBIT earnings of over $20 million and ROFE greater than 15% within two years of Fletcher Building ownership, after earnout-linked efficiency gains and additional capacity expansion plans are completed.
The acquisition will be funded from Fletcher Building’s existing debt facilities and is incremental to the Company’s previously announced capex investments. It is anticipated that the acquisition, which is conditional on Overseas Investment Office approval, will be completed in the final quarter of FY23.