Sir Ron's group in Fletcher running

By GEOFF SENESCALL

Sir Ron Brierley's corporate raider Guinness Peat Group is understood to be eyeing Fletcher Building.

It is believed to be involved in a consortium actively looking at bidding for the Fletcher company.

As part of the process of dismantling the Fletcher Challenge group, offers are being sought for the three remaining divisions.

At a special meeting last week to approve the sale of Fletcher Paper to Norway's Norske Skog, the company said it was at the stage of gathering indicative offers for its energy, forests and building assets.

GPG's New Zealand director, Tony Gibbs, declined to comment on whether it was involved in a consortium.

Given Fletcher Building has a wide range of businesses, it is a prime target to be broken up. GPG is skilled in this area. It also has a war chest of about $300 million. It therefore has the financial muscle to be part of a consortium able to take on a company with a market capitalisation of just under $800 million.

Market rumours suggest little interest in the building asset from a single trade buyer. Indications from Fletcher to date have been it is unwilling to sell off the business in bits. This, in part, is because the time frame for completing the restructure of the Fletcher group is tight. The company has given itself an August deadline for decisions to be made on what is does with each of its assets.

Fletcher Building has 13 significant business units spread across six divisions.

But about 80 per cent of its value is concentrated in three businesses - the concrete division with 39 per cent, the steel division with 24 per cent and the plasterboard division with 19 per cent.

The problem is that those who might be interested in concrete and plasterboard will not be interested in steel and vice versa.

According to a broker research report, this makes a sale to multiple buyers an obvious solution though difficult to achieve.

It believes that a bid from a financial buyer in conjunction with several trade buyers could offer between 288c and 330c a share for Fletcher Building. The financial buyer would pick up any residual assets and divest them at its leisure.

Such an outcome, the report says, would create optimal value for Fletcher Building shareholders.

The broker price range compares to Friday's closing price of Fletcher Building of 229c, down 6c.

Possible buyers of the concrete and plasterboard assets include companies such as CSR, Blue Circle, Hanson, Boral, James Hardie and RMC.

Those interested in steel might include BHP, Onesteel and Smorgon Steel.