Carter Holt, 51-percent owned by global giant International Paper, is to acquire three plants in the central North Island, which produce around 485,000 cubic metres (17.2 million cubic feet) a year of mainly plywood and specialised timber framing for construction.

"It fits with Carter Holt Harvey's strategy to grow our business in our core areas of strength; wood products, pulp, paper and packaging, supported by forests," said Carter Holt Harvey Chief Executive Peter Springford.

Carter Holt, New Zealand's third-largest listed company, said it was paying 6.5 times normalized full year 2004 earnings before interest, tax, depreciation and amortization of NZ$25.5 million. After anticipated savings of NZ$5 million the price would be 5.8 times.

Tenon said an independent valuation of the business was in a range of NZ$123 million-NZ$144 million.

Rickey Ward from fund manager Tyndall Investment said the acquisition made sense for Carter Holt and the premium paid was needed to secure the asset.

"They paid a big price or a higher price than expected but in the giant scheme for Carter's NZ$15 million (extra) is nothing," he said. Tyndall owns stakes of less than five percent in both Carter Holt and Tenon.

Shares in Carter Holt closed up three cents to NZ$2.05. Tenon shares, 50.01 percent owned by fellow Fletcher Challenge offshoot Rubicon Ltd., rose four cents to NZ$2.20.

Tenon will retain its mill and remanufacturing facility in New Zealand's Taupo area and its businesses in the United States and Europe.

It is focusing on timber processing and marketing after selling its 100,000 hectare (247,000 acre) forest estate this year to privately owned Kiwi Forests Group for NZ$725 million.

Three quarters of the structural unit's sales are in New Zealand, with 16 percent in Australia and 7 percent in Asia.

Savings and efficiencies meant the purchase was expected to meet Carter Holt's targeted rate of return for acquisitions, Springford said.

The sale is subject to the successful upgrade of one sawmill and is due to be settled by early in the second quarter of 2005.

Carter Holt has been looking for acquisitions since it sold its tissue business this year for NZ$1 billion.

It plans to sell around a third of its 330,000 hectare (815,000 acre) forest estate but keep the rest to feed its major processing plants.

The company's wood products division makes medium density fibreboard, flooring panels, veneers and plywood.

So far this year, Carter Holt Harvey has bought small Australian packaging concern Wadepack last month for Aust. $84.8 million, and a majority stake in Chinese panel maker Plantation Timber Products in June for NZ$214 million.