Aussie giant reportedly eyeing Fletcher, NZ investors watching closely

Is Wesfarmers interested in Fletcher? Photo/Peter Meecham

New Zealand institutional investors are today eyeing a report about Wesfarmers buying 3 to 4 per cent of troubled Fletcher Building.

"This will be the big story today," said one Auckland-based investment specialist this morning, referring to a report claiming the Australian giant had bought a stake in the Penrose-headquartered builder, materials manufacturer and supplier.

A Fletcher spokesperson said this morning: "We are not aware of a shareholding in the name of Wesfarmers."

A Wesfarmers spokesperson said: "We're not commenting. It is our standard practice either way, neither confirm or deny."

The Sydney Morning Herald reported: "Australia's Wesfarmers has bought a stake of about 3 to 4 per cent in the strife-ridden construction and industrial materials company Fletcher Building, according to some sources close to Wesfarmers."

Fletcher is listed on the ASX and NZX, owns assets here and in Australia as well as Asia, Europe and North America and has more than 18,000 employees. But is has also reported this year on expected losses of nearly $1b.

"I wouldn't be surprised to see an industry investor take a sniff," said an Auckland investor of overseas interest in Fletcher which has suffered issues at the $700m NZ International Convention Centre and at Christchurch's new Justice and Emergency Precinct.

The SMH said: "One of the big questions hanging over newly installed Wesfarmers boss Rob Scott is where he will look to invest shareholders' cash once he has demerged the Coles business".

But in February, it was reported that Wesfarmers' first half profit had plunged 87 per cent to A$212 million on deepening woes at its troubled Bunnings UK business and Target department stores.

The result was largely due to impairments against the two businesses of more than A$1.3 billion, with Bunnings UK and Ireland accounting for A$1.023 billion and Target A$306 million.

Wesfarmers has extensive interests in New Zealand via its Bunnings and Kmart businesses. Bunnings competes with the locally-owned Mitre 10 businesses here.

Fletcher has a strong presence in the sector with its Placemakers network, although that retail business has a strong trade focus.

Wesfarmers dates back to 1914 as a Western Australian farmers' cooperative. It has grown into one of Australia's largest listed companies, headquartered Western Australia.

"Its diverse business operations cover: supermarkets, liquor, hotels and convenience stores; home improvement; office supplies; department stores; and an industrials division with businesses in chemicals, energy and fertilisers, industrial and safety products and coal. Wesfarmers is one of Australia's largest private sector employers and has a shareholder base of approximately 530,000," Wesfarmers said.