$260m buy ends Fletcher shopping spree

By PAUL PANCKHURST and ANNE GIBSON

Fletcher Building's $260 million acquisition of Tasman Building Products takes the company's spend-up in Australia to $1 billion in a year.

Chief executive Ralph Waters yesterday indicated the spree was over - with no imperative to acquire more companies and no targets on his radar.

The deal announced yesterday to buy the roofing and insulation manufacturer and marketer that was once part of the Carter Holt Harvey empire follows the $754 million purchase of wallboard maker Laminex last September.

Analysts were positive on what was dubbed "Laminex Lite" - a smaller but similar deal that again helps to diversify earnings.

Fletcher Building's shares resume trading today.

Broker JBWere was last night "book building" to set the price for a 20 million or 25 million share placement to institutional investors expected to raise $80 million to $100 million to part-fund the deal.

Waters acknowledged Fletcher Building's board had pressed for the "more conservative approach" of issuing equity instead of relying solely on debt for the deal.

Tasman is owned by two private equity investors - GS Private Equity and Quadrant Capital Fund - and its management.

The company was the subject of a A$165 million ($185 million) management buyout in 1998 and its ownership changed again in 2001 with what was described as "a leveraged buyout of a leveraged buyout".

Tasman reported unaudited earnings before interest, tax, depreciation and amortisation of $44.9 million for the year to June 30 on sales of $273 million.

Waters said the purchase price amounted to a "very attractive" multiple of 5.8 on ebitda.

Australia-based Tasman has 755 staff, mostly in Australia and New Zealand.

Most of its revenue last year - 87 per cent - came from roofing and insulation. The balance was from sinkware and flooring, operations that are not core to Fletcher Building and could, according to Waters, eventually be flicked on.

The deal is conditional on approval by Australia's Foreign Investment Review Board - expected to be a formality - and due to settle on September 30.

Tasman is described as number one in insulation products in New Zealand and Australia, with the Pink Batts, Fatt Batts and Insulco brands, and number one in metal roofing tiles in New Zealand.

If the share placement to fund the deal raises $80 million, Fletcher Building will have $1 billion in debt versus $940 million in equity - a ratio of 52.5 per cent to 47.5 per cent.

The company intends bringing that below 50 per cent within a year.