Bored bankers target Fletchers, fund says
Fletcher Building has become a target for Australian investment banks, an investment fund manager has confirmed.
But whether the banks would find a buyer or whether Fletcher was interested in selling was unknown.
Andrew Bascand, managing director of Harbour Asset Management, said investment banks in Australia were trying to drum up business during a quiet patch. Having seen Fletcher Building’s share price drop because of cost over-runs in its construction business, the banks were now trying to find the firm a potential buyer or part-buyer.
‘‘It’s a share price opportunity rather than trouble,’’ he said.
However, he said Fletcher was no stranger to persistent selfreview, selling off parts of itself since the Fletcher Challenge conglomerate was broken up in the late 1990s.
The unrest could also stem from frustrated large investors who had lost money and ‘‘would like to see something happen’’.
But whether there were willing buyers in the wings was something else.
Fletcher had been eyed up by global investors and building companies for years, Bascand said.
‘‘It’s not obvious to me, now that we’re at the peak of the building cycle, why they would strike now. Why didn’t they do it when the stock was $5?’’
Fletcher Building recently warned shareholders that its profit would take a bigger dive than previously forecast, thanks to budget blowouts in its building and interiors arm. Instead of making between $720 million and $760m, the company said it was expecting an annual profit of between $610m and $650m, a downgrade of up to $150m.
There were two big jobs in particular at fault, which it would not name but are believed to be the Justice Precinct in Christchurch and the SkyCity convention centre in Auckland.
Fletcher’s share price has fallen from $10.39 in mid-February to $7.85 last week, recovering to about $8.25 by early yesterday.
The company declined to comment last week when the buyer rumours first surfaced in Australian media.
However, it has confirmed that heads have rolled. Recently it appointed the construction arm’s chief operating officer, Michele Kernahan, as the division’s new chief executive.
‘‘We brought the new people and processes in because we felt this business was off track,’’ chief executive Mark Adamson told media recently.
Harbour’s outlook on the construction sector is that it is being buffeted on a number of fronts, particularly rising costs.