Takeover talk puts Australian Paper on the spot

Would Graeme Hart want to takeover PaperlinX’s manufacturing operations in Australia as part of a CCH/Amcor strategy?

A report in Wednesday’s Financial Review set the hares running again as it speculates on possible scenarios for the consolidation of the region’s cardboard box operations. According to the article by Ingrid Mansell, part of the logic behind a move to buy Australian Paper from PaperlinX is that it would deliver the company’s long-term contract to supply Amcor with 190,000 tonnes of kraft linerboard from the Maryvale Mill in Victoria.

This would prove a useful leverage in the ongoing negotiations between Hart’s Carter Holt Harvey and Amcor to create a $1 billion operation.

The speculation, which a company spokesman dismisses as “speculation about speculation” comes as PaperlinX staggers under a sharp fall in its share price, which slipped to $2.36 from a high in June of $4.13. While the merchanting arm of the company is trading profitably, albeit under difficult circumstances due to the strong Aussie dollar, the manufacturing operations continue to lag.

As the only Australian manufacturer of white paper, Australian Paper operates four mills and also produces a wide range of product. Its difficult situation was canvassed at last month’s AGM by Tom Parks, managing director, who said,” … our Australian operations have been particularly affected by global paper industry issues magnified by a rising Australian dollar. This places enormous pressure on our manufacturing results and on PaperlinX as a whole.”