Fletcher Building today announced that it has completed the purchase of Amatek Holdings Limited (Amatek).
Amatek is a holding company comprising four Australian building products businesses: Rocla Pipeline Products (a national supplier of steel reinforced concrete pipes and precast products), Rocla Quarry Products (a regional operator of sand quarries), Stramit (a leading supplier of roll formed steel roofing and structural products) and Insulation Solutions (a manufacturer of glasswool and foil insulation).
Fletcher Building has the leading New Zealand market positions in each of these businesses but presently only participates in insulation in Australia. The acquired businesses are in good industry structures and have strong market positions.
Chief Executive Officer, Mr Ralph Waters, said: "The acquisition of Amatek is a natural extension of our existing operations and should enable synergies of at least A$10 million to be achieved on a full year basis, arising from combining the insulation businesses and a reduction in corporate costs. Following the successful acquisition and integration of Laminex in 2002 and Tasman Building Products in 2003, Amatek provides Fletcher Building an exciting enhancement to our significant Australian building products business."
The price for the acquisition of these businesses is A$530 million (approximately NZ$582 million).
Amatek was purchased from private interests whose principal shareholders are investors managed by CVC Capital Partners Europe and DLJMB Merchant Banking II Inc. The vendor has retained Rocla Concrete Ties, a US-based precast concrete business that was previously part of Amatek.
"This acquisition further cements Fletcher Building's position as a significant Australasian building materials business", Mr Waters said. "It is consistent with our strategy of selective expansion outside New Zealand to diversify earnings and provide a path for future growth. We have considered the Amatek businesses a good strategic fit for some time, and have carried out extensive due diligence prior to completing the purchase.
The combination of Amatek's fibreglass insulation business, Insulation Solutions, with Fletcher Building's Insulco, acquired with Tasman Building Products last year, creates the largest manufacturer of insulation products in Australasia and brings together the well-known Fat Batts™ and Pink® Batts® insulation brands.
"The pipeline, quarry and roofing businesses acquired are in sectors that Fletcher Building knows well from long-standing involvement in New Zealand, and we are confident this will assist us to develop them further," Mr Waters said.
For the 12 months ended 30 June 2004, revenue for the acquired Amatek businesses was A$743 million and earnings before interest, taxation, depreciation and amortisation (EBITDA) was A$77 million on a normalised basis. Based on performance year-to-date, Fletcher Building expects Amatek's EBITDA to be around A$86 million and EBIT to be around A$63 million, for the year ended 30 June 2005.
The purchase price includes tax losses with an estimated net present value of A$60 million. As a result, tax payments in Australia are expected to be reduced for a period of 2 years and the company does not anticipate being able to attach Australian franking credits to dividend payments until November 2007.
The purchase price, which was settled today, will initially be funded using existing and new bridging bank debt facilities. An underwritten placement of 20 million Fletcher Building ordinary shares has also been arranged to enable a reduction in the bank facilities. Trading on the New Zealand and Australian exchanges has been suspended at the company’s request while the transaction is being completed and the placement of shares undertaken.
The acquisition of Amatek is expected to have a positive financial impact – being immediately earnings per share accretive (pre- and post- goodwill) and EVA (Economic Value Added) positive.
Contacts:
Ralph Waters
Chief Executive Officer
Phone: +64 9 525 9169
Fax: +64 9 525 9032
Bill Roest
Chief Financial Officer
Phone: +64 9 525 9165
Fax: +64 9 525 9032