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Fletcher Building has been given Commerce Commission clearance to buy Stevenson Group's Whangarei and Auckland masonry businesses.
Frank Janssen, chief executive of Stevenson Building Products, said the commission's decision to allow Firth - owned by Fletcher Building - to take over the masonry operations in Drury and Whangarei was a pragmatic business decision. The masonry business had not been making a profit for a number of years and the Stevenson board decided late last year to exit the business, either through closure or
a sale.
"We've tried for years to make the masonry business work. The rest of the business used to absorb the losses but in the current economic climate, it's just not feasible to let that continue," he said.
"Allowing the sale is the best outcome, as it means approximately 70 jobs are expected to be saved."
Paula Rebstock, commission chair, said her organisation was satisfied the purchase would not lessen competition in the Northland or Auckland markets.
Stevenson had submitted that unless the proposed acquisition proceeded, the only alternative was the closure of its Auckland and Northland masonry businesses and its exit from the markets.
John Rae, Stevenson managing director, said last month he hoped a large part of the business could be saved through Fletcher's purchase.
A downturn in the residential housing market, competition from overseas and extremely tight margins had made it impossible to continue, he said.
Last September, the board of four directors, including descendants of company founder William Stevenson, decided to get out of the loss-making masonry business.
Stevenson had other offers but the Fletcher proposal was the only deal that offered more than the masonry business' closedown value.
Janssen referred to the commission having turned down a previous Fletcher bid in 2005.
"In the four years since that decision, no genuine alternate bids have emerged and we've incurred on-going losses in the masonry business despite our efforts to restructure and turn the business around," he said.
Stevenson's experience in the masonry business has shown it was not economically viable for two operators in a market of New Zealand's size and geography, Janssen said.
The sale does not affect the rest of Stevenson Group.
