Fletcher Building target Crane Group has told shareholders today to reject the $A740 million ($NZ992 million) hostile takeover bid, saying it undervalues the company.Crane's shares closed on Friday at $A9.49, a slight premium to the implied offer price of
Fletcher Building target Crane Group has told shareholders today to reject the $A740 million ($NZ992 million) hostile takeover bid, saying it undervalues the company.
Crane's shares closed on Friday at $A9.49, a slight premium to the implied offer price of $A9.35 a share.
Crane, a plumbing and building supplies company that competes with Fletcher in New Zealand, says the offer ignores the "substantial" synergies expected following the acquisition, which includes streamlining the corporate functions of Crane, the use of a combined entity for the purchase of goods and services, and joining the logistics and distribution networks of the two companies.
Fletcher (NZX: FBU) said last week 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.
Fletcher had already built a 14.9% stake in Crane before the offer, which is conditional on a 90% acceptance by Crane shareholders.
Crane says the bid is at a low point in the industry cycle, while the New Zealand company notes the importance of the Sydney-based firm to expand its business in Australia.
"These factors are simply not reflected in the price offered," the board says. "Crane Group's directors recommend shareholders reject the opportunistic bid and take no action at this time."
New Zealand-based analysts have largely welcomed the bid, as have investors, who boosted the shares 5c to $7.78, just 2c shy of its 12-month high, in trading on the NZX today.
