Buy Shares Fletcher Building Limited (FBU)

Fletcher Building ASX FBUFletcher Building Limited (FBU) is a leading property construction and building products provider listed in New Zealand, it is currently the largest listed company across the Tasman.

FBU operates in five separate divisions, building products, steel, laminates & panels, infrastructure and distribution.

Rebuilding effort

The city of Christchurch in New Zealand was struck by a 6.3 magnitude earthquake on 22 February, causing widespread damage and caused the deaths of over 160 people.

The impact of the quake was exacerbated by the effects of an earthquake that had struck the city six months earlier.

The damage from the quake (based on cost to the insurance industry) is estimated at around $12 billion, and will require significant rebuilding efforts.

Fletcher Building, as the dominant construction company in New Zealand will play a major part in the recovery.

Takeover battle

In November FBU launched a takeover offer for embattled pipeline and plumbing supplier Crane group (CRG).

The bid was rejected, and Fletcher Building launched a revised bid in January this year, of $3.50 in cash and one FBU share per CRG share.

This revised bid was endorsed by CRG’s board, which led to most CRG shareholders accepting the offer. Fletcher has just moved to compulsory acquisition stage, which will see it mop up the remaining shares in CRG that it hasn’t received acceptances for.

We expect Fletcher Building to benefit from significant synergies from the CRG takeover, given its unique market positioning and cross-selling opportunities to be created for the combined group.

FBU acquired CRG at a very reasonable price and as a result, we expect the deal to create significant long term value for shareholders.

FBU will be one of the stocks to watch in coming months.

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