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11/4/2018 — General
Green light for Dongwha purchase
By Simon Hartley

Japanese company Daiken Corporation has been cleared by the Commerce Commission to buy Southland-based MDF manufacturer Dongwha, for an undisclosed sum.

In a decision late last month, the Commerce Commission deputy chairwoman Sue Begg said the commission was satisfied merger of the business would not substantially lessen competition in the construction materials supply market.

The MDF (medium-density fibreboard) plant, on State Highway 1 south of Mataura, is about 12 kilometres south-west of Gore. Daiken manufactures and supplies MDF from a North Canterbury plant.

Korean-owned Dongwha was 80% owned by Dongwha International Co, a Hong Kong incorporated company, and 20% by Laminex Group, a division of listed Fletcher Building.

Ms Begg said: “We were satisfied on the evidence before us that the market is currently delivering competitive outcomes and that the proposed acquisition is not likely to substantially change that situation.”

Laminex had purchased MDF from Dongwha for its own New Zealand wood products business and also on-sold some of the MDF to other parties.

Daiken's parent company Daiken Corporation is a Japanese company specialising in the manufacture and supply of wood-based construction materials; its New Zealand subsidiary producing only MDF.

In January this year there a fire was distinguished with minimal damage to the plant. In November 2016 there was an explosion and fire at the plant; a similar fire callout earlier in April, while in November 2015 the plant's energy centre went up in flames. In September 2010, firefighters were called to tackle a large blaze at the plant.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.

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