Crane to lose head office in Sydney

The Sydney head office of Australia's $1.3 billion Crane Group will shut after Fletcher Building's takeover.

Fletcher chief executive Jonathan Ling has no immediate plans for widespread rationalisation of the many Crane businesses but he said there was no need to keep Crane's HQ open and it would be merged into Fletcher's Sydney office,.

Fletcher will now integrate Crane into its business, creating a sixth separate division headed by David Worley, ex-PlaceMakers boss.

Fletcher's divisions will be building products, distribution, infrastructure, steel, laminates and panels and Crane, incorporating its brands iPlex Pipelines, Gatic Milnes, Tradelink, Mastertrade, Mico, Corys, Austral Wright Metals and Crane Copper Tube.

Ling said Crane held good market positions, particularly in the PVC pipeline manufacturing and distribution network which would significantly benefit Fletcher.

"We believe the plastic pipe market has good growth over the next decade."

Fletcher's market capitalisation was $2.8 billion when Ling became chief executive in September 2006 and he will now spend about a third of his time in Australia, a third in New Zealand and the rest elsewhere.

Fletcher has drawn more institutional and superannuation fund buyers lately after new calculations on March 18. Buyers were rejecting Telecom in favour of Fletcher, pushing up Fletcher's ASX shares to A$6.70 by last Wednesday when Fletcher announced it had bought 90 per cent of Crane, triggering compulsory acquisition of the remaining 10 per cent.

Fletcher is now in the S&P/ASX 200 Index which Ling said meant inclusion in many funds.

Philip King, general manager investor relations, said Fletcher's NZX market capitalisation rose from $9.9 billion to $10 billion on Wednesday last week after Fletcher issued seven million new shares as part of the Crane takeover, a part-cash part-scrip deal.

Ling named a group crucial to the deal's success including two long-serving Fletcher executives, chief financial officer Bill Roest and company secretary and general counsel Martin Farrell.

He also praised Bell Gully partner Brynn Gilbertson, a corporate law specialist in acquisitions, divestments, joint ventures, privatisation, corporate fundraising, public offerings and private placements.

Gilbertson said he was a long-time adviser to Fletcher Building.

"I worked alongside Gilbert & Tobin from Sydney and the Fletcher Building in-house team on the legals for the Crane acquisition. This was the first successful scrip-based takeover offer that a New Zealand company has made for an Australian company in a very long time.

"A key reason for the success was that Fletcher Building had spent a long time looking at Crane. It had been on their radar for a number of years. At the outset they had a very clear idea of value and what their walk-away position was, so when the market conditions lined up at the end of last year, Fletcher was in a position to make its decision to launch its bid. The deal team then had to work very hard in the period before Christmas to get the offer out while the timing was right," Gilbertson said.

"Because the company had that clear idea of value, it was a very calm deal. As Jonathan says, it was a 'nice-to-have, not a must-have'. When issues arose, as they do through this type of process, the outcomes were always very clear because of the work they had put in establishing their position and objectives at the beginning.

"In any transaction, there are decisions required that have the potential to either deliver success or derail a process. On this transaction, when those decisions were required of Fletcher - what would be required to get recommendation from the Crane board, whether to go unconditional - those decisions were made in a very calm fashion and against those original objectives," Gilbertson said.

"Another reason for the success of this deal is the experience of the Fletcher management team in large-scale acquisitions. They also know the Australian market very well."