Fletcher Building raises Crane bid, shares fall

Fletcher Building has raised its bid for Australian-based plumbing supplies and plastic pipelines maker Crane Group, and the Crane board is recommending its shareholders accept the revised offer.

Fletcher Building today said the new offer was one Fletcher Building share and $A3.50 ($NZ4.50) cash for each Crane share. Crane was also to pay A50c per share as a fully franked special dividend. The total implied value to be received by Crane shareholders including the special dividend was $A10.07 per Crane share.

The previous Fletcher Building offer had been priced at $A9.35 a share and comprised $A3.47 cash and one Fletcher Building share for every Crane share.

Fletcher Building shares closed down 16c at $7.73 today and they traded as low as $7.70 when the trading halt was lifted.

James Smalley at Hamilton, Hindin Greene said it was typical for the share price of bidder's to fall when a bid was raised, particularly when it had a scrip element.

He said the market had taken the announcement in its stride and trading today indicated that "this is it" for the takeover.

Earlier some brokers had argued that Fletcher Building should not raise the bid because the synergies between the two companies were uncertain.

Crane's directors are recommending Crane shareholders accept the revised offer and they intended to accept the revised offer with respect to the holdings of Crane shares they owned or control, Fletcher Building said.

The revised bid is still subject to regulatory approvals and to Fletcher Building getting at least 90 percent of the shares.

Crane has terminated discussions with other parties and has agreed to exclusivity with Fletcher Building.

Based on the Fletcher Building share price of $A6.07 at the close of trade on the ASX last Tuesday, and assuming a A50c special dividend was paid by Crane, the total implied value to be received by Crane shareholders equated to $A10.07 for each Crane ordinary share.

That was within the fair market value range from an independent expert engaged by Crane.

It was a 35 percent premium to the closing price of Crane ordinary shares -- adjusted for Crane's interim dividend of A22c -- on December 14, the date prior to Fletcher Building making its first announcement of the takeover offer for Crane.

The revised offer also represented a prospective price/earnings multiple of about 20.6 for the 2011 financial year.

While Fletcher Building had consented to Crane's A22c interim dividend not reducing the cash consideration of the revised offer, Crane shareholders who accepted would not receive the interim Fletcher Building dividend, which would not be more than 16c (A12c) per share.

Fletcher Building currently has about 15 percent of Crane's ordinary shares.

Figures from Statistics New Zealand today show the 994 new dwellings, including apartments, authorised in December were the lowest in a December month since the series started in 1965.

But economists said the numbers would probably not get any worse.