Fletcher buy may hinge on watchdog

The fate of Fletcher Building's bid to make another big acquisition in Australia may rest with a competition watchdog.

The Business Herald has confirmed Fletcher Building wants to buy all of CVC Amatek, a building products company believed to be worth $500 million to $600 million.

It is not known if Fletcher would sell some of the assets.

The Australian Competition and Consumer Commission is looking at an application from the company for clearance to buy Insulation Solutions - a part of Amatek.

The commission is checking whether the deal would be anti-competitive.

Insulation Solutions makes insulation products from glasswool and reflective foil for businesses and homes.

The commission says it expects to announce its findings on February 3.

Fletcher Building chief executive Ralph Waters yesterday rejected speculation in the finance industry that a purchase of Amatek was almost complete.

"We remain interested but we understand we're in a competitive process and nobody has told us that we're in a favoured position."

If Fletcher Building emerged as the number one bidder, the deal could still founder on final terms and conditions - or the commission's approval.

Waters rejected a report in the Australian Financial Review that the commission had "given the deal an implicit nod".

The commission has extended a public consultation period on the proposed purchase by five weeks. It now ends next Monday.

A commission spokeswoman would not comment on the inquiry. But its website said the extension was to seek more comment on whether imports of glasswool insulation products would help to preserve competition.

The acquisition of Insulation Solutions would leave Fletcher Building with one main competitor in the sector in Australia - CSR.

When the Business Herald broke news of Fletcher Building's interest in Amatek in November, Rob Mercer, head of research for sharebroker Forsyth Barr, said buying Insulation Solutions would make sense.

"The bottom line is that the insulation business is ripe for consolidation in Australia.

"And regulations in the new building code have made it mandatory for insulation to be installed in new buildings in all states."

Amatek's website says the group has a turnover of about A$750 million ($815 million) and is predominantly owned by funds managed and advised by British private equity investor CVC Capital Partners.

The Amatek group also includes the businesses Rocla, which makes concrete pipes, and Stramit, a manufacturer of roll-formed steel building products.

Fletcher Building mentioned Insulation Solutions to analysts as a possible target last September.

The insulation business is reported to have annual revenue of A$100 million and about 33 per cent of the Australian market for glasswool insulation.

Fletcher Building has spent $1 billion on acquisitions across the Tasman since 2002.

Amatek was the source of wallboard manufacturer Laminex, bought for $754 million.

The company went on to do the deal known as "Laminex Lite" - the $260 million purchase in 2003 of Tasman Building Products.

BIDDING BIG

Fletcher Building is New Zealand's third-largest listed company, with a market capitalisation of $2.86 billion.

It is a bidder for CVC Amatek, believed to be worth $500 million to $600 million.

The Australian Competition and Consumer Commission is checking whether part of the deal would be anti-competitive.