Amatek purchase plans

Fletcher Building is leaning away from funding the planned purchase of Australian building products group Amatek by issuing new shares.

The company told analysts yesterday that the purchase would take its gearing - the ratio of debt to debt plus equity - to about 50 per cent.

At sharebroker First New Zealand Capital, analyst Andrew Mortimer said chief executive Ralph Waters had previously named 45 per cent to 50 per cent as his target.

"That's the top end but not excessive, so they probably wouldn't have to raise equity."

Working backwards from the statement on possible debt levels, analysts calculated the company planned to pay $500 million for Amatek.

That compares to previous estimates in the market of $500 million to $600 million.

Waters said yesterday he would not speak about Amatek until negotiations were concluded.

"We intend to resolve it one way or another by the end of February."

Amatek is owned by CVC Capital Partners, and its products and operations include insulation, concrete pipes, roofing and quarries.

The group includes insulation manufacturer Insulation Solutions, Rocla, which makes concrete pipes, and Stramit, a manufacturer of steel building products.

A buy will increase Fletcher Building's annual revenue - already on track to top $4 billion this financial year - by another $700 million to $800 million.

The Australian Competition and Consumer Commission has cleared the part of the deal that raised competition issues - the acquisition of Insulation Solutions.