Barring the appearance of a rival bid (which has not been suggested by any reports) New Zealand-based Fletcher Building looks to have nabbed Crane Group after boosting its initial offer price.
The higher bid has always been coming after both companies went into a trading halt late last week amid talk of negotiations on a higher price.
As a result of those talks, the Crane board said in a statement yesterday that it is recommending its shareholders accept the revised offer, according a statement issued yesterday before trading had started on the ASX.
Fletcher Building said the new offer was one Fletcher Building share and $3.50 cash for each Crane share. Crane was also to pay 50c per share as a fully franked special dividend.
The total implied value to be received by Crane shareholders including the special dividend will be $10.07 per Crane share. That’s almost $800 million in all.
The previous Fletcher Building offer had been priced at $9.35 a share and comprised $3.47 cash and one Fletcher Building share for every Crane share.
And the higher price will be effectively financed by Crane shareholders, rather than by Fletcher.
Fletcher Building said yesterday that Crane’s fully franked special dividend from accumulated profits of 50c per share and Crane’s interim dividend of 22c a share to be paid on February 22, would not reduce the cash consideration of the revised offer.
Crane’s directors said the were now unanimously recommending Crane shareholders accept the revised offer subject to no superior offer being made.
And Crane directors intend to accept the revised offer with respect to the holdings of Crane shares they owned or control.
Fletcher Building currently has about 15% of Crane’s ordinary shares.
If Fletcher Building acquires 100% of Crane Group as a result of the offer, Crane Group shareholders will own approximately 10% of the combined group following completion, which illustrates how unimportant the bid is to Fletcher in the greater scheme of things.
Crane Shares rose 4% to finish at $9.96 as punters took the view that Fletcher would win.
Fletcher shares fell 8c to $5.99 as investors punished the stock for the higher offer.
In fact, with no sign of a counterbid, Fletcher could have played hardball and refused to go higher.
But it chose to lift the bid price by 10% and secure approval from the Crane board.
