Hungry Fletcher set to spend

By PAUL PANCKHURST

Fletcher Building is looking at yet another buy in Australia.

The top-10 listed company may take another bite out of Amatek - the source of wallboard manufacturer Laminex, bought by Fletcher Building for $754 million in 2002.

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

The Business Herald was told 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 million) and about 33 per cent of the Australian market for glass-wool insulation.

This is the business analysts says could be worth $100 million.

Those contacted yesterday did not have estimates for Rocla.

Sharebroker Forsyth Barr's 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.

Billion-dollar buyer

Fletcher Building is one of New Zealand's biggest listed companies, with a market capitalisation of $2.5 billion.

Under chief executive Ralph Waters, the company has spent more than $1 billion since 2002 on acquisitions in Australia.

Now, it is looking at buying two parts of an Australian company.

Analysts say one part could be worth $100 million. They do not know the value of the other.