Woodchipper Gunns Ltd has acquired a 17.9 per cent stake in Forest Enterprises Australia Ltd at ten cents per share.

Gunns said on Friday it would fund the acquisition of the shares via a placement of 5.7 million Gunns shares and a cash payment of $1.58 million.

"The investment by Gunns recognises the strategic importance to the forest industry of further consolidation," Gunns said.

Shares in Forest Enterprises Australia were 0.5 cent lower at 12 cents at 1023 AEST on Friday. Gunns was down two cents at 96 cents.