Fletcher Building has announced it will make an $85 million profit on the sale of its Rocla Quarry Products business, following clearance from authorities in Australia.
Fletcher is selling the Australian quarry business to Australia's Hanson Construction Materials, following clearance from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
"Completion of the sale of RQP will result in a post-tax profit to Fletcher Building of approximately A$77 million (NZ$85 million), reflecting the gain on sale of all RQP assets, offset by transaction costs and adjustments to asset carrying values. This gain will be included in the financial results for the year ending 30 June 2016," an NZX announcement just out said.
"The purchase price paid by Hanson to Fletcher Building for RQP is A$150 million. In addition, the divestment to other third parties of joint venture quarry assets and other RQP assets excluded from the transaction with Hanson has generated a further A$44 million. The aggregate consideration received for the entire RQP business is A$194 million (NZ$212 million) subject to customary completion adjustments," the announcement said.
"Credit Suisse and First NZ Capital acted as financial advisors, and Ashurst acted as legal advisor to Fletcher Building on the transaction," the company said.
Fletcher is due to release its December half-year result next month.
Mark Adamson, Fletcher Building chief executive, has previously said he had not spent a cent on new acquisitions since he took over. Instead, he has been quitting assets fast, dealing with the difficult legacy of selling business which were either under-performing or not up to expectations.
"In my time in the job, we have not made one single acquisition," Adamson told just under 400 shareholders at Fletcher's annual meeting last year. "I have had to deal with what we have today. Profitability is improving, maybe not as fast as anyone would like," he said.
A Fletcher statement explained the rationale behind sales.
"Fletcher Building is undertaking an ongoing review of its business portfolio with a focus on lifting operational and financial performance and pursuing organic growth. The review process invariably leads to speculation on a range of possible outcomes. The company is aware of its continuous disclosure obligations, and will promptly communicate to the market if or when there are substantive matters required to be disclosed," the statement out late last year said.