By Paul McBeth
Greenheart Group has signed a conditional deal to buy Northland Forest Managers (1995) for $1.5 million as the Hong Kong-listed owner of Northland's Mangakahia forestry estate looks to expand its New Zealand interests.
Greenheart on Thursday said it entered into a conditional agreement to buy all of the shares in Kerikeri-based Northland Forest Managers, which oversees 19,000 hectares of plantation forest throughout Northland. The forest manager counts Greenheart as its biggest client.
"The forest management service company is a well-established business with the prerequisite knowhow, experience and professionalism in plantation operation," Greenheart said in a statement.
"The company believes the acquisition will increase the group's presence in New Zealand and expects that the experienced forest management team will assist greatly with the possible expansion of the group's plantation business in New Zealand and to other regions in the future."
Earlier this week Greenheart told the Hong Kong exchange it was in talks about a potential acquisition, to explain a 24 per cent spike in its share price. The shares last traded at 64 Hong Kong cents.
The deal is expected to be completed five days after the conditions are met or Feb. 1, whichever is later.
Northland Forest Managers is co-owned by managing director Nick Kingsford and business manager Liz Kingsford.
In September, Greenheart said its New Zealand business experienced a sharp decline when prices for radiata pine fell to US$23.30 per cubic metre from $US33.70/m3 in the six months ended June 30, 2015.
Greenheart's New Zealand business accounted for about 89 percent of Greenheart's $HK297 million of first-half revenue.
The company said it would reduce its local harvest based on market conditions through the second half of the year.