Published: 1 March 2005
Fletcher Building Ltd has completed its $A530 million purchase of Amatek Holdings Ltd, a holding company for 4 Australian building products businesses.
Amatek’s businesses are Rocla Pipeline Products (a national supplier of steel reinforced concrete pipes & precast products), Rocla Quarry Products (a regional operator of sand quarries), Stramit (a leading supplier of roll formed steel roofing & structural products) & Insulation Solutions (a manufacturer of glasswool & foil insulation).
Fletcher Building leads the New Zealand market in all those businesses but had only been participating in insulation in Australia.
Fletcher Building chief executive Ralph Waters said the acquisition should produce synergies of at least $10 million/year. It’s bought Amatek 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.
For the June 2004 year, revenue for the acquired Amatek businesses was $A743 million, ebitda $A77 million on a normalised basis. Based on performance year-to-date, Fletcher Building expects Amatek’s ebitda to be around $A86 million and ebit to be around $A63 million, for the June 2005 year.
Mr Waters said the purchase price included tax losses with an estimated net present value of $A60 million, which should reduce the group’s Australian tax payments for 2 years. It will mean the company can’t attach Australian franking credits to dividend payments until November 2007.
Fletcher Building will initially use existing & new bridging bank debt facilities to fund the purchase. It was also placing 20 million shares today to reduce the bank facilities.
Mr Waters said the acquisition should be earnings-accretive immediately, both before & after goodwill, and be EVA (economic value added) positive.
Websites: Fletcher Building