takeover speculation

Bid talk boosts Gunns shares
By NICK CLARK
17sep05
SHARES in timber group Gunns have spiked, after speculation Adelaide-based Futuris was considering a takeover bid.

Gunns shares closed at $3.27 yesterday, after the Australian Financial Review published the rumour in its Street Talk column on Thursday.

The closing price was 21c above that before the speculation.

Futuris Investor relations manager Don Murchland said yesterday the company had a policy of not commenting on its intentions, or on market speculation.

He declined to comment on whether Futuris owned any Gunns shares.









The share price rise came on a solid turnover of three million shares.

Gunns shares have dropped significantly in the past month, since a lower-than-expected annual result of $101 million was released.

Analysts had expected an annual profit of $108-$110 million.

Trouble in the woodchip market has undermined the share price, which stood at $4.80 in October.

Strong currency has priced Gunns woodchips out of the market, with countries such as Uruguay, Ecuador Vietnam and Brazil undercutting.

Gunns executive chairman John Gay said the company may sell on the spot market if the currency stayed strong.

In Tasmania, it has meant a reduction in harvest quotas for contractors and log hauliers.

Many have had their task cut to 70 per cent of contracted amounts.

Woodchip exports for the 2004-05 year were 4.37 million tonnes, compared with 4.7 million the year before -- a drop which cost the company $43 million.

Exports have also been affected by campaigns against old-growth woodchips.

Analysts have also been concerned about the perceived long lead time between the debt funding of a $1.1 billion investment in a pulp mill and the generation of income.

Tamar Residents Action Committee co-ordinator Les Rochester said TRAC would lobby Futuris Corporation to abandon the $1.1 billion pulp mill plan if a takeover went ahead.

"The people of Tasmania have a right to know what its intentions are regarding the proposed pulp mill," Mr Rochester said.

Futuris holds a 22 per cent stake in Tasmanian agribusiness Webster.