Fletcher snaps up Aussie steel firm

By ANDREW JANES - The Dominion Post | Wednesday, 08 October 2008

Fletceher Building has entered a conditional agreement to buy Fielders Australia in a move aimed at strengthening its presence in the roll-formed steel building components market.

Fielders is jointly owned by Hills Industries - with 60 per cent - and FSR Investments.

It employs 890 people throughout Australia and has annual sales of A$275 million (NZ$313.7 million).

First NZ Capital analyst Andrew Mortimer estimated Fletcher would have to pay more than $175 million. The agreement conditions include due diligence, Australian regulatory approval and the approval of Fletcher's board.

It was hard to know at this stage whether Fletcher would get it for a good price, Mr Mortimer said.

"We'll just have to wait and see how the pricing works out. They've got a free option. If they decide not to proceed, I guess they won't."

Fielders, which is based in Adelaide, makes roll-formed steel building components for the Australian commercial, industrial and residential construction industries.

Fletcher subsidiary Stramit is in the same market, though it does not have a significant presence in South or Western Australia.

"I guess the key rationale behind this, in relatively choppy times, is effectively to fill up some geographical gaps," Mr Mortimer said. "And the fewer competitors in that space the better [for Fletcher]."

Fletcher Building shares closed down 8c at 642 compared with the NZX 50, which closed down 1.45 per cent at 3004.19.