A merger in the South Island fibreboard business has been approved by the Commerce Commission.
It will allow the Japanese company Daiken New Zealand to acquire 100 percent of the shares in Dongwha New Zealand Limited, which is 80 percent owned by a Hong Kong-based company.
Daiken makes medium density fibreboard or MDF from a plant it operates in North Canterbury.
Dongwha makes MDF in Southland.
The commission said the merger would not substantially lessen competition in the relevant market.
MDF is made by breaking down timber into wood fibres and binding them with resin under high pressure.
It is used in a similar way to plywood.