New Forests sizes up another buy

New Forests is increasingly looking like a strong contender for Forest Enterprises Australia.

With New Forests expected to be officially announced as the buyer of Gunns by Wednesday, the focus is now on whether the Sydney-based timber plantation manager will also swallow Forest Enterprises Australia.

New Forests is increasingly looking like a strong contender.

Gunns and FEA are collectively worth as much as $700 million, and a $707m capital raising by New Forests last month added fuel to suggestions it would aggressively pursue both businesses, currently in the hands of their financiers.

Final bids were believed to have closed last week for FEA, which comprises 97,900ha of mature hardwood forests and 46,000ha of land in NSW, Queensland and Tasmania.

It was expected to sell for a price somewhere between $200m and $400m and a buyer could be announced within weeks, if not days.

The business was placed on the market in December through Gresham and Deloitte, shortly after timber company Gunns came up for sale.

Rival suitors to New Forests for FEA are four international groups, including US-based Campbell Group, GMO Renewable Resources, Global Forest Partners and Resource Management.

Dataroom reported on Thursday that New Forests had bought Gunns for about $330m, subsequent to mounting speculation that the company was looking increasingly like a strong contender to swallow the business.

The Gunns forestry assets are being offloaded in separate lots.

The majority of the business, selling to New Forests, was being handled by investment bank Moelis and Korda Mentha.

Real estate firm CBRE was also selling a separate portfolio of 94 Tasmanian forests controlled by Gunns, for which New Forests was not a suitor.

A decision on the buyer of those assets, believed to be worth about $45m, was expected in June.

New Forests did not return a call from The Weekend Australian about the deal yesterday, while Korda Mentha said the Gunns portfolio was still under negotiation as part of a confidential process.

New Forests has more than $2.3 billion of assets under management globally.

It bought Great Southern’s land bank in 2010 for $415m, and purchased the trees on the land during the next two years.

Chief executive David Brand had previously said the company was looking at opportunities.