Fletcher Building is tipped as target as GPG fills war chest

Friday 11th May 2001

USEFUL ADDITION: With Fletcher Building split off, it has become an easier target

By Nick Stride

Guinness Peat Group was yesterday making moves that signal a major acquisition - with Fletcher Building seen as its most likely target.

Talk that Fletcher Building is a takeover target, and that GPG is interested in breaking it up, is not new but the idea has been backed up by the quiet announcement last Friday that GPG is looking to raise up to $250 million from New Zealand investors.

GPG has appointed sharebroker JB Were to advise on the "possible" capital notes issue.

Chairman Sir Ron Brierley said the issue would be "a useful addition to the range of capital resources available to GPG when considering prospective investment opportunities."

GPG's recently released annual report shows it is in no need of funds. At December 31 it had £29.8 million ($101 million) of debt and £59 million ($201 million) in cash.

Shareholders' funds of £292 million included £19.3 million of convertible loan notes.

Fletcher Challenge put Fletcher Building up for sale during last year's group separation process. A number of trade players looked at parts of the business that dovetailed with their own operations but none was willing to bid for the whole division.

FCL chairman Rod Deane said then "a financial player" looking to split the division up and sell its parts to trade players had shown interest but had not come up with a price acceptable to the FCL board.

Now that Fletcher Building has been separated from the FCL group, any bidder can put its offer directly to shareholders.

The company's share register is wide open. Only AMP Henderson, with 5.03%, has filed a substantial security holder notice.

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