Fletcher Building today announced that it has signed an agreement to purchase Tasman Building Products Pty Limited (Tasman).
Tasman has significant building products operations in Australia and New Zealand and a small operation in USA. It has the leading Australasian position in metal roofing tiles, is the only New Zealand manufacturer of glasswool insulation and is one of three glasswool manufacturers in Australia. Tasman is one of the two stainless steel sink manufacturers in Australia and the leader in the access (i.e. raised) flooring market in Australasia.
Chief Executive Officer, Mr Ralph Waters, said "The acquisition is a logical extension of our building products envelope in New Zealand, enhances our Australian position and provides further growth opportunities. It fully meets all our investment criteria - good industry structure, leading market positions, capable management and attractive financial parameters. It is a business we have been interested in acquiring for some time."
Tasman is to be purchased from private interests whose key shareholders are G S Private Equity and Quadrant Capital. The price agreed for the acquisition is A$230 million (approximately NZ$260 million).
The acquisition, which follows extensive due diligence on the company, brings to a close a formal sales process that started in May this year.
For the 12 months ended 30 June 2003, revenue for Tasman was A$243 million and earnings before interest, taxation, depreciation and amortisation (EBITDA) was A$40 million subject to final audit.
The Tasman business units will form part of Fletcher Building's Building Products division, replacing the $300m of panels revenue that has recently been transferred to the Laminates and Panels division. Fletcher Building's Distribution division is already a major distributor of Tasman products in New Zealand.
"The acquisition enhances our position in Australia and provides greater geographic diversity in our earnings base. Synergies of over NZ$5 million per annum should be fully realizable during the next financial year." Mr Waters said.
Tasman has a number of growth opportunities. "The Australian and New Zealand insulation markets have good prospects for growth arising from the adoption of new energy efficiency standards. We are also excited by the growth prospects for roofing, particularly in Japan, and the wider introduction of the Oliveri sinkware range into New Zealand and the United States of America, where distribution is already established.
Funding and Financial Impact
The purchase price will be funded by an underwritten placement of 20 million new ordinary FBU shares, and additional debt. At FBU's discretion, the size of the equity capital raising may be increased to 25 million shares.
Trading on the New Zealand and Australian stock exchanges was suspended today at the company's request, pending this announcement and the book-build process for the placement. Waivers have been granted by the New Zealand Exchange from Listing Rules 7.3.5 and 9.2.1 subject to certain conditions being satisfied. Approval has been granted under Listing Rule 8.1.4 to allow the shares to be allotted under the proposed placement to be issued at a price established by way of an institutional book-build process.
The acquisition of Tasman is expected to be immediately positive to earnings per share.
The purchase is subject to approval of the Australian Foreign Investment Review Board, certain third party consents and no material adverse change to Tasman's business. If approved, the acquisition is expected to be settled at the end of September 2003.
Fletcher Building was advised by Deutsche Bank and the placement is underwritten by JBWere.
Chief Executive Officer
Phone: +64 9 525 9169