Greg Sedgwick, the boss of Fletcher Building takeover target Crane Group, says he is confident the company has the support of its major shareholders in its call to reject Fletcher's A$740 million ($960 million) takeover offer.
Speaking yesterday - the first day in which Crane shareholders could accept Fletcher's A$9.35a share offer - Sedgwick said he had spoken to institutional shareholders before Christmas and they appeared to be "more than comfortable with the board's position".
"We have set up a shareholders communication process and had a few calls to that. Our shareholders appear comfortable with our position."
Sedgwick said Crane's board strongly opposed the Fletcher bid because it believed the offer undervalued the company.
"We have spent a lot of time in the last couple of years restructuring the company, each division has a strong market position and as a company we have very low debt levels."
The company had less than 20 per cent debt and was on track to meet guidance for its half-year results due out at the end of the month, he said.
"This company is very solid."
Sedgwick said he agreed with Fletcher's view that the merged businesses would create substantial synergies and costs could be cut through management restructuring and a reduction in warehouse facilities. "There is also a lot of revenue and sales upside for them in Australia. They would gain access to our 250 outlets and in New Zealand they would be able to distribute our products. We just feel our shareholders are not receiving due recognition of those quite substantial synergies."
Sedgwick said the company had appointed Ernst and Young as independent advisers and was now focused on getting its target company statement completed by the end of January.
He would not talk about speculation that there are other bidders in the wings. "I can't really say anything on that. But if you step back and look at it a lot of companies would covet being able to buy a business with a number one position in Australia."
Shares in Fletcher Building closed up 4c at $7.87 yesterday while Crane rose A1c to close on A$9.50. Fletcher's offer closes on February 25 and is conditional on regulatory approvals.
