Sept. 15 (Bloomberg) -- Carter Holt Harvey Ltd., the biggest lumber maker in Australia and New Zealand, may bid for Tenon Ltd.'s sawmill and structural timber business, people familiar with the plan said.

Auckland-based Tenon, New Zealand's second-largest lumber company, will issue sale documents ``shortly,'' Chief Executive Officer John Dell said in an interview.

Carter Holt is investing in more sawmills and board plants to reduce its reliance on falling log prices and increase the value it gets from each tree felled. Tenon may use the sale proceeds to expand plants making high-value furniture components and moldings for European and U.S. customers.

``It looks like a pretty good natural fit for Carter Holt Harvey,'' said Paul Robertshawe, who helps manage the equivalent of $690 million at Tower Asset Management in New Zealand. The Tenon assets ``would provide them with additional scale and are core to what they already have in New Zealand.''

Tenon's three New Zealand timber businesses and sawmill unit that may be sold are valued at about NZ$180 million ($119 million), the people said. Tenon shares were 2 cents lower at NZ$2.07 at 1:49 p.m. in Wellington.

Auckland-based Carter Holt, half-owned by International Paper Co., North America's biggest paper maker, has been buying sawmills and panel plants, saying it wants to invest in wood processing. Carter Holt spokesman David Jamieson declined to comment.

`Unsolicited Expressions'

Carter Holt sold its tissue business to Svenska Cellulosa AB for NZ$1.02 billion in March and held back about half the proceeds for other investments. In June, Carter Holt paid $134 million for control of Plantation Timber Products in China.

Tenon hired Goldman Sachs JBWere Ltd. earlier this month to advise it on the sale. Deutsche Bank AG was hired by Carter Holt to advise it on the bid, the people said.

Dell said the company hopes to complete the outcome of a review of the unit by mid-December. He declined to say if Carter Holt has submitted an offer for the business.

``We have received a number of unsolicited expressions of interest,'' said Dell, adding the company was also considering other options for the business. He declined to elaborate.

Goldman spokesman Edward Naylor declined to comment. Deutsche Bank's spokeswoman in Sydney Kate Abrahams wasn't immediately available.

Commodity Export Prices

New Zealand's commodity export prices index rose for a 14th month in August to the highest level in its 18-year history. Forestry products have risen 33.1 percent this year, the most among a basket of exports including seafood and aluminum, according to Australia & New Zealand Banking Group Ltd.

Tenon, previously known as Fletcher Challenge Forests Ltd., last year agreed to sell about $473 million of forest land.

Structural lumber accounted for 45 percent of the company's NZ$556 million of sales in the year ended June 30, with most of that coming from the framing lumber, plywood and flooring it sells in Australia and New Zealand. Grant Samuel & Associates valued the structural lumber business at between NZ$123 million and NZ$144 million.

Carter Holt shares were 1 cent lower at NZ$2.24.

To contact the reporter on this story: Ambereen Choudhury in Sydney at achoudhury@bloomberg.net

Last Updated: September 14, 2004 22:21 EDT