Fletcher Building could be target for takeover

By PAULA OLIVER construction writer

Redundancies and asset sales will be part of aggressive cost cuts planned for Fletcher Building, which analysts say could make the streamlined company an early takeover target.

The diverse company, which includes Fletcher Construction, Firth, Fletcher Aluminium and Placemakers, will become a standalone business if shareholders next month approve plans to dismantle the Fletcher empire.

Fletcher executives have made no secret of their strategy for Building since announcing its future last October.

Each part of the company will be reviewed, removing duplication and at times triplication of jobs and selling parts that do not fit into an overall high-value strategy. Areas of promise will be expanded.

Analysts spoken to suggested that the streamlined company would be a more attractive target for takeover.

A sale process last year came to nothing, but potential buyers which were discouraged by Building's diversity could come back into play, and rumours were persisting in the market that a party who showed interest was keen to make another bid after separation.

Fletcher Challenge chairman Roderick Deane said significant progress was being made towards cutting Building's costs, but no details could yet be given of what might be sold or how many jobs could go.

The amount of money that could be shaved from the operations had also not been determined yet.

Fletcher executives have previously stated their intention to sell the company's concrete-based interests in Peru, Bolivia and India.

But Dr Deane said there was no intention to move away from being an across-the-board player in the New Zealand building market.

He rebutted criticism of the newly appointed Building board as lacking fresh blood, saying the inclusion of seasoned Fletcher heads ensured that the transformation of Building would be strong and successful.

Fletcher Building's share price rose sharply last week, ending on Friday at $2.22.