KEY POINTS:
Fletcher Building shares soared over 6 per cent to a record high today after they resumed trading following a highly successful share placement.
The $327 million raised from the placement will help fund the $1 billion purchase of iconic US laminate company Formica Corp announced yesterday.
Fletcher shares
initially traded at $13.15 against their $12.65 level before they were suspended yesterday ahead of the acquisition and placement announcement.
They kept rising in hectic sharemarket action, reaching $13.41, up 76 cents half an hour after the market opened.
Fletcher placed 26 million shares at $12.60, just a 0.4 per cent discount to their previous prevailing price.
Today's placement lifts Fletcher's market capitalisation to $6.7 billion.
Brokers said the placement price and subsequent action was a huge vote of confidence in the deal.
Forsyth Barr broker David Price said it was a good acquisition with plenty of synergy benefits and at reasonable earnings multiple.
Despite the share price rise, it was still below Forsyth Barr's valuation of $14.00
The rise in Fletcher propelled the New Zealand top 50 share index to a new record high.
Fletcher chief executive Jonathan Ling described the placement as very successful.
"This is a further vote of confidence in Fletcher Building, and the strategy that has led to acquisitions such as Formica," he said.
The placement was well supported across a broad range of institutional investors, particularly those that already held shares in the company, he said.
The underwritten placement was jointly conducted by a global bookbuild tender process, led and underwritten by Goldman Sachs JBWere and Deutsche Bank AG.
The purchase will make Fletcher the biggest laminate maker and seller in the world.
The rise and rise in Fletcher Building's share price and market capitalisation has restored the Fletcher name close to the pre-eminent status it held through much of the 20th century.
The company made its name building state houses after World War 2.
Today, it is clearly the number two listed stock and closing fast on Telecom, which is capitalised at just under $10 billion.
It has left former No 2 stock, power company Contact Energy, capitalised at $5.1 billion, in its dust.
Of the unlisted companies, dairy co-op Fonterra would have a substantially higher valuation and State-owned Meridian would be up there, as would Graeme Hart's privately owned Rank Group, which bought Carter Holt Harvey for $3.3 billion last year and this year paid a similar amount for Swiss packaging group SIG.
When the Fletcher Challenge conglomerate was split up in 2001, Building was very much the Cinderella of the group after Fletcher Energy and Fletcher Paper were sold for about $5 billion each.
Building's shares were six times below today's price at $2.16 before the split and the company was capitalised at less than $1 billion.
- NZPA
