The board of building and industrial products company Crane Group today wrote to its shareholders, advising them that the takeover offer from New Zealand’s Fletcher Building is inadequate.

The New Zealand building materials group, Fletcher Building, announced on December 15 its intention to make an offer for all shares in Crane Group, but found the bid in insufficient, despite Fletcher Building acknowledging the offer is coming at a low point in the industry cycle. “The consideration of one Fletcher Building share and A$3.43 in cash for each Crane Group share is inadequate and undervalues the company,” Crane Group chairman Leo Tutt said.

Crane said the offer does not take into account the substantial synergies expected to be available to Fletcher Building as a result of the acquisition, which have been publicly identified by Fletcher Building. They include streamlining the corporate functions of Crane Group to align the functions with those required by a division rather than an independent publicly listed company, maximizing sales of the combined Fletcher Building and Crane Group’s manufactured products through owned distribution channels.

Fletcher Building also seeks to leverage the scale of the combined Fletcher Building and Crane Group in the procurement of products and services, and amalgamate logistics and distribution arrangements with other parts of the combined Fletcher Building and Crane Group.

The highly conditional offer fails to adequately recognize Crane Group’s standalone value or the strategic value of the company to Fletcher Building.
Crane’s shares closed 1.48 percent lower to $9.35 on the ASX Monday.