Fletcher forced to increase cash portion of Crane bid

Philip King. Photo / Supplied

Fletcher Building will have to dig slightly deeper into its bank reserves to fund its acquisition of Australia's Crane Group after it was forced to increase the cash portion of its offer.

The construction company yesterday revealed its finalised bidders statement for Crane with its cash offer up from A$3.43 to A$3.47 per share.

The offer, which was initially made on December 15, includes one Fletcher share per Crane share valuing the deal at A$9.35 per Crane share or about A$740 million ($970 million).

Fletcher spokesman Philip King said the cash portion had been increased because the share portion of the deal had to be valued at a certain point in time and combined they needed to add up to the A$9.35 value.

The value had to be equivalent to that paid to some institutional shareholders as part of Fletcher's pre-bid buy of a 14.9 per cent stake in Crane under Australia's Corporations Act.

Asked if it would push up the cost of the Crane acquisition, King replied: "Yes, but not in a material sense."

Fletcher is funding the deal by issuing 67.3 million Fletcher Building shares for A$400 million as well as borrowing about A$340 million under existing undrawn bank facilities.

The bidders statement also revealed the opening and closing dates for the offer which will open tomorrow.

King said Crane shareholders would be sent the official documents from tomorrow with the offer period set to close by February 25.

But the slightly revised bid did not gain any further traction with Crane which reiterated its earlier statement calling for its shareholders to "reject the inadequate takeover offer".

In a letter to investors posted on the ASX, Crane chairman Leo Tutt said the offer price undervalued Crane Group.

"Fletcher Building is not paying for the substantial synergies and strategic value that Crane Group can deliver to it. The offer is highly conditional, uncertain and is not final."

Fletcher shares closed steady yesterday at $7.78.