Fletcher Building confirms it is in the hunt for Amatek assets

12.00pm

Fletcher Building today confirmed it was in the hunt for more assets from Australia's Amatek.

Fletcher Building told the stock exchange today that it had been participating in a sale process "for some of the businesses of the Amatek group of companies".

"While the company has undertaken some due diligence, no decision on its interest in these businesses or the terms on which it could participate has been made."

It gave no further details.

Fletcher Building in 2002 bought wallboard manufacturer Laminex from Amatek, for $754 million.

The size of the new potential purchase is not known, but analysts say one part of it could be worth $100 million.

It is understood that Fletcher Building was looking at two parts of Amatek. One was Insulation Solutions, which makes insulation; the other was Rocla, which makes concrete construction products.

Amatek is mainly owned by funds managed by British private equity investor CVC Capital Partners, the Amatek website says.

Fletcher Building suggested Insulation Solutions to analysts as a possible target in September.

The insulation business is reported to have annual revenue of A$100 million ($110.95 million) and about 33 per cent of the Australian market for glass-wool insulation.

Forsyth Barr research head Rob Mercer said Insulation Solutions would be a good fit.

It would leave Fletcher Building with one main competitor in the sector in Australia -- CSR.

"It would make sense for them to do it," he said.

"The bottom line is that the insulation business is ripe for consolidation in Australia.

"And regulations in the new building code have made it mandatory for insulation to be installed in new buildings in all states."

The potential deal would follow the Laminex purchase and "Laminex Lite" -- the nickname for the $260 million purchase last year of Tasman Building Products.

That pushed Fletcher Building over the $1 billion mark for acquisitions under expansionist chief executive Ralph Waters.

Analysts say the company's $850 million of debt is a "comfortable" level.

Shareholders at Fletcher Building's annual meeting in Auckland on Tuesday learned the company was expecting earnings before interest and tax of $475 million to $500 million for the year, a gain on the previous year's $460 million.

Chairman Roderick Deane said that after four months of trading, the company was comfortably ahead of last year.

It was less reliant than it had been on residential building and the New Zealand economy.

Strong markets in non-residential and infrastructure building aided its "major positions" in cement, steel and construction.

Fletcher Building shares closed a cent higher at $5.79 yesterday.

- NZPA and NZ Herald