Sharechat Logo

Daily ShareChat: Fletcher Building

By Jenny Ruth

Wednesday 9th February 2011

Text too small?
 Jenny Ruth

Fletcher Building is now paying a full price for Australia's Crane Group after revising up its takeover offer, says Rob Mercer at Forsyth Barr.

Still, "we see merit in the upside potential of the merged businesses over the medium term," Mercer says.

Given the revised bid has gained the full support of Crane's board, Mercer expects the bid to be successful.

Fletcher's revised bid, a mix of cash, special dividend and shares, is equivalent to A$10.07 compared with its original A$9.35 offer.

"The revised higher bid will cost Fletcher Buidling an extra NZ$46 million (or 7.6 cents per share for Fletcher shareholders) which we believe will be recovered through achieving a quick and successful takeover and upside over the medium term from the merged companies," he says.

"Most importantly, we see the Crane businesses as being a good fit with Fletcher Building's existing operations."

Mercer has a positive outlook for building activity over the next three to five years. He values Fletcher shares at $10 each and is forecasting a $398.8 million reported net profit for the year ending June, up from $272 million the previous year, rising to $449.4 million in 2012 and $492.2 million in 2013.

"Fletcher Building offers good value in the $7.50 to $8.50 range."


Recommendation: Buy.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Fletcher Building faces probe into plasterboard supply deals
Fletcher closes Christchurch plasterboard plant after finding asbestos
Fletcher Building names Charles Bolt as general counsel, replacing Farrell
Fletcher beats estimates with $326M FY profit as NZ revives, Australia stays flat
Fletcher executive Worley leaves as underperforming Crane unit brought in-house
Fletcher puts strategy under microscope seeking $70M annual gain, will shed jobs
Fletcher Building 1H profit edges up
Fletcher Building capital notes rollover at 5.4 percent from 8.9 percent
Fletcher Building offloads CSP Coating galvanised steel unit
Fletcher not abusing its role running Canterbury home repairs, EQC says