An almost $100 million deal to buy an award-winning Northland timber operation should see the company expand, creating potentially hundreds more jobs, particularly around Kerikeri and Whangārei.

New Zealand building and construction giant Fletcher Building
has bought Waipapa Pine Limited and Renewable Wood Fuels for $97 million (including land and buildings but excluding earnout).

Fletcher Building Limited said wood products was an attractive sector in which it is currently underrepresented.

Waipapa Pine director and CEO Shane Horan said the sale would enable the company to at least double in size, providing more job security for the firm’s employees and the wider wood processing and timber industries.

When Horan and fellow directors Grant Arnold and Adrian Broughton took over the company almost a decade ago, it was in receivership with 22 staff, but they have turned it around to now employ 84 people at sites in Waipapa and Whangārei and have established it as a very profitable, multi-million dollar company.

It’s also won multiple awards, with a strong focus on employing Māori. In 2016, Waipapa Pine was crowned Supreme Westpac Northland Business of the Year, and the company also won the Vodafone Excellence in Large Business Award. That year, Waipapa Pine was also named Best Māori Business of the Year.

Horan said he and his fellow directors would stay on for at least the next 12 months as the company transitions into its new structure and expands and he grows support for the company’s existing client base. He said the deal will bring huge benefits to Northland.

‘’It’s going to provide more opportunities to expand and build capacity, and Fletchers are committed to really growing the business. I expect it to more than double, which will bring much more work here, but also for the many other businesses and suppliers we use in Northland. All our employees will remain in their roles, but we’ll need far more staff. We’re really enthused by it all.

’It will need more logs and provide more job opportunities in all those other businesses too, so this is totally positive for Northland. The spin-offs for Northland will be more employment and more money pumped into the local economy, as we all benefit – whether that be in the forests, the suppliers and contractors we have, or the wider industry.’’

Horan said a big aspect of why he believes Fletcher approached the company was due to its use of the latest, high-tech equipment.

Waipapa produces a range of sawn timber products, including industrial and structural grades, and includes a renewable fuels business.

It has a geographical advantage due to being in Kerikeri (sawmill) and Whangārei (timber treatment plant), close to the supply of high-quality logs, so it can service its highly-valued customers from the Far North to Hamilton.

Fletcher Building said it intends to continue to serve these customers and expand production capability to strengthen Waipapa’s ability to support the market.

Fletcher Building’s chief executive Ross Taylor said the Waipapa business is well-run and is testament to the vendors’ commitment to the business over the last 10 years.

“Waipapa forecasts revenue of $50 million and Ebit of $14.5 million for the 12 months ended December 31, 2022. It is expected to generate mid-cycle Ebit earnings of over $20 million and return on funds employed (ROFE) greater than 15 per cent within two years of Fletcher Building ownership, after earnout-linked efficiency gains and additional capacity expansion plans are completed.”

He said the acquisition will be funded from Fletcher Building’s existing debt facilities and is incremental to the company’s previously announced capex investments. It is anticipated that the acquisition, which is conditional on Overseas Investment Office approval, will be completed in the final quarter of the 2023 financial year.