Fletcher Building Ltd has reached agreement to sell its 50% stake in the Sims Pacific Metals Ltd recycling joint venture to Sims Metal Management Ltd of Australia for $42 million.
The purchase price is subject to a working capital adjustment which will be finalised post-acquisition. Based on current estimates, Fletcher Building expects total proceeds of the divestment to be between $55-60 million.
Fletcher Building subsidiary Fletcher Steel Ltd & Sims Metals Management established Sims Pacific Metals in 1992 as a 50/50 joint venture.
It’s New Zealand’s largest metal recycling company, operating 9 sites around the country converting scrap metal products into recyclable materials.
In line with Fletcher Building’s strategy to divest non-core businesses, the company decided to exit the joint venture and focus its steel division operations on its manufacturing & distribution activities.
When Carter Holt Harvey Ltd bought Elders Resources NZFP Ltd from Australian mining company North Ltd in 1989, it divested Elders’ non-forestry businesses, including Sims. Sims relisted on the ASX at the end of 1991, shortly before the deal was struck with Carter competitor Fletcher, which had its own smaller subsidiary, Pacific Steel Ltd.
Fletcher sold Pacific Steel in 2015 to BlueScope Steel Ltd, formerly part of the BHP group.
Attribution: Fletcher Building release, Sims Metals, Pacific Steel.