Crane deal not under threat: Fletcher

Philip King. Photo / Supplied

Fletcher Building has rejected speculation that competition issues could torpedo its Crane Group bid.

Philip King, general manager for investor relations, was yesterday commenting after the Commerce Commission said it was probing the A$740 million deal.

"Our bid for Crane is subject to conditions including Commerce Commission approval and the Australian Competition and Consumer Commission approval.

"This is simply confirmation of the process they will follow in processing our application and an indication of likely timing.

"The ACCC also have their review process under way," King said.

"Prior to acquiring shares in Crane, we obtained legal advice around the necessary regulatory approvals we would require.

"That advice was strongly of the view that there were unlikely to be any issues of significance with the regulatory authorities and that remains our view today," King said.

The commission said yesterday it was assessing competition issues.

The two companies operate similar businesses here and in Australia and the commission said it would declare its decision by February 24, a day before the close of Fletcher's offer for 90 per cent of Crane's shares.

"In New Zealand, the main area of overlap between Fletcher Building and Crane Group are the manufacture and supply of pipes and pipe systems," the commission said.

In assessing the relevant market in respect of pipes and pipe systems, the commission will consider:

* The extent to which concrete pipes are substitutable for pipes made from plastic or other materials in respect of "large bore" pipe systems (at this stage the commission understands that 'large bore' pipes are those with an internal diameter of 350mm or greater).

The commission understands that in certain circumstances, different types of plastic pipes (polyvinylchloride, polyethylene or polypropylene) are able to be substituted for each other. The commission will investigate the extent of any substitutability and the ability of both suppliers and customers to switch between the different types of plastic pipes.

* The commission will investigate whether the characteristics of various customer groups such as construction/civil engineering, and rural/irrigation customers are significantly different such that they may form discrete customer markets.

* The commission understands a significant proportion of pipes and pipe systems are supplied through Humes and Hynds pipe system outlets.

The commission added that it will investigate "whether there are separate functional markets for the manufacture of pipe systems and the supply of pipe systems".