Fletcher Building might have to dig deeper and boost its hostile takeover for control of Australian building and plumbing supply company Crane Group.
Fletcher, which already has a 14.9% stake in Crane and wants to increase it to 90%, is offering a combination of script and cash to the value of $A9.35 per share.
The $A740 million ($NZ987 million) offer has already been rejected by Crane's board, which said it was under value, inadequate and opportunistic and urged shareholders to await a independent valuation.
Craigs Investment Partners broker Chris Timms said that, since the offer, Crane shares had risen and were trading around $A9.67, noting Craigs retained an earlier 12-month price target of $A9.50 per share.
The New Zealand Herald reported analysts in Sydney saying Fletcher might have to increase its offer to $A10.32 per share to gain the stake it seeks.
Mr Timms said Fletcher had to deliver a premium of about 20% to the shareholders and believed Fletcher would make a second offer, probably about $A10 per share.
"There's no way there will be a full cash component ... but we are expecting a second offer," he said.
He expected Fletcher to continue with a "disciplined approach" to the takeover and any subsequent offer, considering its purchase of Formica in the United States had badly underperformed and hit its bottom-line.
Crane said the two divisions of its business attracted the attention of other parties but, other than media speculation, there has been no such disclosure.
Last week, Fletcher general manager of investor and media relations Philip King said following the offer announcement, the company had further discussions with Crane shareholders and the general sense was positive, Reuters reported.
