The sales process for Fletcher Building's Formica unit is about to get underway, and is most likely to attract the interest of private equity buyers, the Australian newspaper reported.
Flyer documents are being sent out to buyers who will receive information memorandums for the business next month, with the hope a sale is finalised by Christmas, the newspaper said without detailing where it got the information. The newspaper named buyout funds such as Lone Star, which owns building materials firm Arclin, Bain Capital and Platinum among potential buyers.
The Auckland-based construction and building products company announced plans in April to sell its Formica and steel roofing tiles businesses after a strategic review under new chief executive Ross Taylor which will see it retreating to its main New Zealand and Australian markets following losses in its construction business. In February, Morningstar valued the international division at $1.36 billion and Formica alone at $730 million. Fletcher paid US$700 million to buy Formica Corp from private equity owners Cerberus Capital Management and Oaktree Capital Management in 2007.
The Australian newspaper report suggested Formica, which makes high-pressure laminates used on desks, and for interiors such as kitchen tops, cupboard linings and display units, could be worth about A$1 billion.
Fletcher shares last traded at $6.92 and have fallen 8.7 per cent over the past year. Of analysts polled by Reuters, eight rate the stock as a 'hold', one a 'sell' and one a 'strong sell'.