Fletcher Building, with $1 billion untapped borrowing capacity, yesterday spent about $40 million buying an Australian business.

Australian Construction Products, with annual revenues of about A$20 million ($25.2 million), is the target in a deal expected to be settled by September 1. Fletcher will pay a mix of cash and shares and the deal is subject to some commercial conditions.

Jonathan Ling, chief executive of New Zealand's biggest listed business, flagged such a purchase at Wednesday's annual results announcement in Auckland.

Smaller acquisitions which he described as "bolt on" businesses were his target. He said no big deals were on the table and that situation would remain until markets showed longer-term signs of recovery.

Fletcher did not say how much it was paying but investor relations general manager Philip King indicated the price range.

"Jonathan mentioned at the result we were looking at acquisitions in the $10 million to $50 million range."

The Australian business is a market leader in safety barriers and roading products. Through its CSP Pacific business Fletcher operates here in engineering, manufacturing and distribution of roading barriers.

Infrastructure division chief Mark Binns said the buy would tap into growing road spending in Australia.