Fletcher Building snaps up Laminex

By ANNE GIBSON

Self-confident and energetic Fletcher Building chief Ralph Waters secured market dominance in building products on both sides of the Tasman yesterday with his $754 million deal to buy Australian wallboards manufacturer Laminex Group.

The Australian, who turned Fletcher Building from a $272 million loss last year to a $93 million profit this year, carried out his avowed intention to expand through acquisition.

"Who wants to sit here and get whacked by Aussies all the time?" gloated one senior Fletcher Building executive yesterday. "Now we're whacking them a bit, huh?"

The largest New Zealand building products maker has agreed to buy Laminex from the privately owned Amatek Holdings Group, whose main shareholders are investors managed by CVC Capital Partners Europe and DLJMB Merchant Banking II.

Fletcher Building will pay A$645 million ($754 million), with up to A$20 million extra payable if Laminex exceeds financial targets in the year to June 30, 2003.

The purchase will be funded by a mixture of bank debt and a placement of 43.7 million shares, increasing the number of shares on issue by 12.6 per cent to 390.26 million.

The purchase is subject to shareholder and Australian Foreign Investment Review Board approval.

Fletcher Building, which has $1 billion of assets, now has the lion's share of concrete and plasterboard manufacturing and distribution in New Zealand as well as Australian market dominance with Laminex, the biggest manufacturer and distributor of laminated wood panels there.

Laminex had A$608 million sales in the year to June 30, pouring its products into 30 Laminex Group Service Centres which are part of a nationwide 43-shop network.

Its Australian dominance comes through selling about 80 per cent of all decorated medium-density fibreboard and about a third of all the plain particle board there.

Fletcher Building dominates the same market here, selling $300 million of wood panels every year, including some Laminex and Formica products.

"The Laminex Group is an industry sector that Fletcher Building has been involved in for 30 years and thus understands very well," Waters said yesterday.

The former managing director of Australian appliance and metals firm Email said securing Laminex gave Fletcher Building assured manufacturing and supply channels in Australia.

"At Email, we made fridges, but we had to rely on retailers like Hill & Stewart to sell them and hope that they would. But Laminex owns its own distribution systems," he said, drawing a parallel between Fletcher's manufacturing operation in New Zealand with the PlaceMakers and Building Depot retail outlets which are also part of the Fletcher Building empire.

The largest commercial builder, Fletcher Construction, and the largest house builder, Fletcher Residential, are also owned by Fletcher Building, providing a ready outlet for its cement, steel, wire, aluminium and other building products.

Fletcher Building shareholders will vote on the Laminex purchase at the annual meeting on November 12. If they agree, Waters plans to settle in mid-November.

He said the Laminex deal had no anti-competitive issues because the purchase was in Australia: "We don't make any high-pressure laminates at all, so there's no competitive issues because we don't add any shares together in Australia.

"While we make medium-density fibre board and particle board here, we don't have any Australian plants, so we increase our Australasian share but it's not as if two Australian competitors are reducing competition in Australia.

"Nor will any jobs be lost as it's not a rationalisation plan."

The Laminex Group

Fletcher Building