Fletcher shrugs off rival bids for Crane

Fletcher Building chief executive Jonathan Ling. Photo / Dean Purcell

Fletcher Building has poured cold water on speculation that it is facing rival bids in its move to acquire Australian firm Crane Group and says its offer is the only firm one on the table.

Fletcher's A$740 million ($960 million) offer opens today amid talk in the Australian media that Crane Group may have held discussions with other interested parties and could consider a rival offer.

Those parties may include British building supplies company Wolseley Plc, Australian retailer Woolworths and GWA Group - a company which supplies building fixtures and fittings to households in Australia.

A spokeswoman for the Crane Group said it had no comment to make on possible other bidders.

But the company has made it clear that it is not in favour of the Fletcher bid, calling for its shareholders to "reject the inadequate takeover offer".

Fletcher Building spokesman Philip King said the firm had noted the speculation but the outcome of any other approaches was highly uncertain.

"Fletcher Building's offer is for the whole of business. Everything else is just speculation."

The talk has suggested at least one potential rival bidder may be studying an offer for all or just part of the Crane business.

One source said the Australian hardware business was very competitive and those who knew the industry would not be surprised if there were others interested in the Crane business.

Crane's Pipeline division, which manufactures and distributes plastic pipe systems in Australia and New Zealand, and its Tradelink business, which operates 220 plumbing supplies outlets in Australia, were thought to be particularly attractive because of their strong positions in the Australian market.

But another source said it was hard to see any bidder other than Fletcher that would derive as much benefit from bringing the two companies together.

The merged companies should deliver synergies and be able to take advantage of a cyclical bounce in the building sector, although benefits from infrastructure building would depend on how much the Australian Government invested in that space.

But the source said it was also the fiduciary duty of Crane's board to get as much value for shareholders as they could and if it was perceived that more value could be gained by breaking up the business, then the board could look at that.

Fletcher Building revealed it would make a takeover bid for Crane on December 15 and on Monday announced its finalised bidder's statement increasing the cash portion of its offer from A$3.43 to A$3.47 a share.

The offer also includes one Fletcher share per Crane share, valuing the deal at A$9.35 a Crane share or about A$740 million.

Crane Group has said it will release a target company statement explaining the reasons why investors should reject the offer around January 31.

The Fletcher offer closes on February 25.

It is conditional on a number of regulatory approvals including New Zealand's Commerce Commission.

New Zealand's largest listed company already owns 14.9 per cent of Crane and must reach 90 per cent for the bid to go ahead.

Crane shares closed up 10c at A$9.49 yesterday while Fletcher Building shares closed up 9c at A$6.03 on the Australian stock exchange.

Fletcher's New Zealand shares closed up 5c at $7.83.

THE OFFER

* Fletcher Building is trying to buy Australia's Crane Group.

* It already owns 14.9 per cent of the shares.

* For each of the remaining shares, it is offering one Fletcher Building share and A$3.47, implying a value of A$9.35 a share.

* This puts the deal at A$740 million.

* The offer closes on February 25.