Fletcher confirms Amatek interest

By PAUL PANCKHURST and BLOOMBERG


Fletcher Building yesterday confirmed a Business Herald report that it was looking at buying businesses in the Amatek group in Australia.

But its two-sentence statement to the stock exchange was silent on the scale of the potential deal - leaving speculation to bubble along.

Analysts and investment bankers are tossing around variations on how many hundreds of millions of dollars could be involved.

Back-of-an-envelope calculations by analysts put the value of one of the target businesses, Insulation Solutions, at $100 million.

The Business Herald was told Fletcher Building was also looking at Rocla, a maker of concrete construction products.

One estimate yesterday was that a deal to buy both companies could hit $300 million.

But others were talking of much higher numbers, with some seeing the possibility of a wider deal with Fletcher Building onselling unwanted assets.

The other part of Amatek is the steel-building products business Stramit.

Fletcher Building told the stock exchange yesterday that it had taken part in a sales process - including due diligence work - but that no decisions had been made.

The statement did not name the businesses it was looking at.

Fletcher Building has spent $1 billion on acquisitions in Australia since 2002, including board maker Laminex and Tasman Building Products.

"They've done pretty well so far in Australia," said Paul Richardson, at institutional investor BT Funds Management New Zealand.

"There's possibly some desire to be more involved in the infrastructure and construction side of the industry there as well."

Fletcher shares rose 1c yesterday to close at $5.80.

The stock has gained 37 per cent this year.

Fletcher Building produces almost all this country's wallboard and half its cement.

It accounts for 60 per cent of concrete pipe and pre-stressed concrete sales and is the biggest seller of insulation.

Buying Insulation Solutions would give Fletcher Building about 46 per cent of Australia's A$350 million ($388 million) insulation market, and about 64 per cent of the sales of fibreglass products, according to a presentation Fletcher Building gave in June.

Australian sales are rising after new laws required insulation to be fitted in all new homes.

New commercial buildings will have to be insulated from 2006.

Elsewhere, Fletcher Building yesterday announced a $12 million conditional deal to buy and upgrade a Malaysian roofing tiles business.

The business, Malaysian Roofing Industries, is a subsidiary of Nylex Group.