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Fletcher bids for plastic pipe business

Wednesday 15th December 2010

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The Australian company Fletcher Building today signalled a hostile bid for is New Zealand's leading trade-related wholesale merchant for plumbing, pipeline, electrical and safety products.

New Zealand's largest building company said it is pursuing Crane Group via a cash and scrip bid that values the target at $A740 million ($NZ983 million). The conditional offer is $A3.43 cash and one Fletcher Building share for every Crane share.

Fletcher Building, which built up a 14.9% stake prior to the offer, said the $A9.35 a share value of its offer is a 28% premium to the weighted average price in the last month. Crane's share price has fallen from above $A10 in February.

Crane traces its history back to 1867 and it expanded in the booming 1950s and 1960s.

In 1994 it expanded into New Zealand with the purchase of Tradelink Plumbing Supplies from Burns Philp & Co Ltd. That acquisition doubled the size of Crane's plumbing supplies business.

Its New Zealand unit, Crane Distribution New Zealand, encompassed Mico Plumbing and Pipelines, MasterTrade and Corys, an electrical supply business, according to its website.

Fletcher Building's business units include Humes Pipeline Systems in New Zealand and Rocla Pipeline products in Australia. Fletcher Building also owns the Placemakers building materials supplier.

Crane divides its business into three categories of pipelines, trade distribution and industrial products.

Fletcher Building said the acquisition would give it a plastic pipe manufacturing business, which would extend its existing concrete pipe business.

Crane's trade distribution business in plumbing and electrical supplies would complement Fletcher's existing trade distribution business.

In industrial products, Crane had a specially metal manufacturing and distribution business that would complement Fletcher Building's significant steel distribution business in New Zealand.

Crane had revenues of $A1.8 billion and earnings before interest and tax of $A68 million in its 2010 financial year.

New Zealand sales of its trade distribution business fell 13% to $A300.7m in the year to June 30 and earnings before interest and tax of $800,000 in New Zealand were down 76% on the previous year, according to a presentation.

The company has been reducing costs and consolidating branches and reducing staff in New Zealand.

The takeover continues Fletcher Building's expansion in Australia.

Fletcher Building said it will operate Crane as a new independent division.



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