Fletcher Building chief executive Jonathan Ling. Photo / Sarah Ivey
Crane Group, the listed Australian building products company, has told its shareholders to reject Fletcher Building's A$740 million ($989 million) takeover bid.
Crane said Fletcher's offer ignored the "substantial" synergies expected following the acquisition, which included streamlining the corporate functions of Crane, the use of a combined entity for the
purchase of goods and services and joining the logistics and distribution networks of the two companies.
Fletcher Building said last week the acquisition would give it a plastic pipe manufacturing business, which would extend its existing concrete pipe business.
Crane's trade distribution business in plumbing and electrical supplies would complement Fletcher's existing trade distribution business.
Fletcher Building said it had built a 14.9 per cent stake in Crane prior to the offer, which was conditional upon a 90 per cent acceptance by Crane shareholders.
The bid gives a combined value of A$9.35 ($12.54) per Crane share, according to Fletcher's calculations.
Crane said Fletcher's bid was at a low point in the industry cycle, while the New Zealand company noted the importance of the Sydney-based firm to expand its business in Australia.
"These factors are simply not reflected in the price offered," the board said.
"Crane Group's directors recommend shareholders reject the opportunistic bid and take no action at this time."
Fletcher swooped on Crane's register, securing a cornerstone 14.9 per cent stake then announcing a full takeover bid last Wednesday and castigating Crane for poor performance.
Secret negotiations between senior Fletcher and Crane executives were extensive but failed to result in an agreement.
Ling said Crane had about 12,000 retail investors holding 40 per cent of the shares on issue.
Crane and Fletcher operate in the same market, manufacturing building products and working in the trade distribution sector, and Fletcher chief executive Jonathan Ling has searched since his $1 billion Formica acquisition for a business to give him more firepower.
Ling and Fletcher chairman Ralph Waters are Australian.
Crane is about a quarter Fletcher's size with A$1.8 billion annual revenue and earnings before interest and tax of A$68 million in 2010, compared with Fletcher's $6.7 billion revenue.
If it succeeds, Australia would become Fletcher's largest market, surpassing New Zealand for the first time in eight years since the spinoff listed.
- AAP/ NZ HERALD
