Fletcher Building places shares at $2.95 each

By NZPA

Thursday 19th September 2002

Fletcher Building Ltd said today it had placed 43.7 million shares at a price of $2.95 each, well ahead of most analysts' expectations.

The $129 million capital raising will help pay for its $761 million purchase of Australian building products firm The Laminex Group, announced yesterday.

Building shares leapt 18 cents to $2.99 shortly after the book building exercise to price the share placement conducted by JB Were and UBS Warburg.

Chief executive Ralph Waters described the placement as an outstanding success.

The new shares will be issued on settlement next Thursday.

"This is a vote of confidence in Fletcher Building, the acquisition of The Laminex Group and in the strategy behind it," Mr Waters said.

"The placement price represents a 5 percent premium to the closing price of $2.81 prior to the announcement of the transaction," Mr Waters said, adding that support for the placement had been uniformly strong among a broad range of institutional investors, particularly those whose that already held shares in the company.

A columnist in the Australian Financial Review suggested today that if Building could successfully bed down the Laminex deal, and prove that it had not overpaid, "then its sights will likely shift, in time, to the next big one -- acquiring the Australian $A1 billion ($NZ1.2 billion) Pioneer company from its UK parent Hanson plc".

The purchase would boost the share of revenue that Building sources from Australia to 24 percent, "further highlighting a need for the Australian Stock Exchange and its New Zealand counterpart to get their acts together and merge," the Street Talk columnist wrote.

Hanson was adding insult to injury by considering quitting Australia after having acquired one of that country's "great international corporate success stories", he wrote.

CSR, Boral and Pioneer are Australia's three heavyweight building industry companies which together account for 70 to 75 percent of the market.

Carter Holt Harvey last year spent $432 million buying CSR's medium density fibreboard (MDF) and particle board business.

Street Talk said that any potential purchaser for Pioneer would have to be an outsider, such as Building, to satisfy the competition authorities.

Building made the Laminex purchase, from privately owned Amatek Holdings Group, halting at the 11th hour the separate float of Laminex.

The rest of the purchase will be funded from debt.

Mr Waters has long wanted to spread the company's wings away from the small and cyclical New Zealand market which is five times smaller than Australia's.

Laminex makes laminated wall panels, including household brands like Formica and Formex, which are used to line kitchens and bathrooms.

It operates six plants in Australia and one in New Zealand and has about 80 percent of the decorated medium density fibreboard market across the Tasman and about 45 percent of the plain particleboard market.

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