Gunns moves on timber rival

The Tasmanian timber company Gunns has made a large investment in its rival, Forest Enterprises Australia.

Gunns now has a 17.9 per cent stake in the company.

Gunns paid 10 cents per share for the acquisition, which has been funded by $5.7 million in Gunns shares and a cash payment of $1.58 million.

Financial analyst Will Homan says it's likely Forest Enterprises needs the finance after a recent downturn in the sector.

The company reported a $90 million fall in the sale of plantation schemes for the last financial year.

Mr Homan says it's a significant investment for Gunns and the company may have a takeover in mind.

"A takeover bid though can't take place until the company gets to 19.9 per cent," Mr Homan said.

He says with an acquisition of this size, Gunns could expect to take up a position on FEA's board.

More Quotes and Company Information:FOREST ENTERPRISES AUSTRALIA LIMITED (ASX: FEA.ax) ... read original article
Fri 3rd July 2009 - 12:22pm