Fletcher swoop follows months of efforts to woo rival Crane

Fletcher has been after a business to give it more firepower. Photo / Supplied

Fletcher Building spent months trying to woo Australia's Crane Group before starting this week's hostile A$740 million ($987 million) takeover bid.

Jonathan Ling, Fletcher chief executive, revealed how negotiations between the two ASX-listed businesses went on for some time. Asked about those talks, Ling acknowledged the dialogue, which he said had taken place within the last year.

Fletcher swooped on Crane's register, securing a cornerstone 14.9 per cent stake then announcing a full takeover bid on Wednesday and castigating Crane for poor performance.

Secret negotiations between senior Fletcher and Crane executives were extensive but failed to result in an agreement.

Ling said Crane had about 12,000 retail investors holding 40 per cent of the shares on issue.

Crane and Fletcher operate in the same market, manufacturing building products and working in the trade distribution sector, and Ling has searched since his $1 billion Formica acquisition for a business to give him more firepower.

Ling and Fletcher chairman Ralph Waters are Australian.

Crane is about a quarter Fletcher's size with A$1.8 billion annual revenue and earnings before interest and tax of A$68 million in 2010, compared with Fletcher's $6.7 billion revenue.

If it succeeds, Australia would become Fletcher's largest market, surpassing New Zealand for the first time in eight years since the spinoff listed.

On Wednesday, major institutional investor Maple-Brown Abbott of Sydney's George St issued an ASX notice saying it was no longer a substantial shareholder.

Fletcher's bid pushed Crane shares up from just over A$7 to about A$9.40, outpricing Fletcher's own offer which has implied a value of A$9.35. Crane was yesterday trading down a cent at A$9.39.

Institutions in New Zealand have already predicted Fletcher might have to pay more and they said Ling got a grilling from at least one analyst on Wednesday.

Fletcher does not just need Crane shareholder approval. It also needs the green light from Australia's Foreign Investment Review Board and the Australian Competition and Consumer Commission.

WHAT NOW

* Within two weeks: Fletcher documents released.

* Within 30 days: Crane's response released.

* Late April: Deal expected to close.