Fletcher Building shares hit a three-month high yesterday as investors flocked to the stock, emboldened by the likelihood of a successful takeover of Australian competitor Crane Group.
Fletcher shares rose a further 0.5% to a three-month high of $8.27 yesterday, with more than 1.1 million shares changing hands before noon.
Fletcher already had a 15% stake in plumbing supplies and plastic pipeline-maker Crane when it launched its hostile takeover bid in mid-December.
The initial offer of $A9.35 ($NZ12.25), made up of Fletcher script and cash, was initially dismissed by Crane's board and queried by analysts.
However, a revised offer of $A10.07 per Crane share was made at the end of January, with all Crane's directors subsequently recommending its shareholders accept the revised offer.
Craigs Investment Partners broker Peter McIntyre said institutional investors holding Crane stock and Australian competitors of Fletcher were now "taking notice" of Fletcher and that the $A800 million bid was likely to go ahead.
"The share price has been trading at a discount to Australian peers ... but the Crane takeover has made Fletcher stand out," Mr McIntyre said.
Forsyth Barr broker Peter Young said Fletcher's ability to meet ASX 200 liquidity requirements and be eligible to enter the index was a major part of its recent share-price movement.
"Fund managers have been adjusting portfolios. Last week, Fletcher had an extremely large volume [of shares] go through and the price shot up from $7.80 to current $8.27," he said yesterday.
"Concerns over the Crane bid seemed to have disappeared.
"The upped bid certainly wasn't at the cheap end of the spectrum and the Crane purchase won't add a lot of value short term, but medium term it is expected to be good for Fletchers," Mr Young said.
Investors were concerned with general confidence in Fletcher over the next 12 to 18 months, rather than in the short term, Mr Young said.
Mr McIntyre said, for the past year, Fletcher stock had been "range-bound", trading around $7.50 to $8.50 per share, but several positives for the stock had emerged.
Aside from the likelihood of the Crane takeover going ahead, there was recognition of the amount of forward work Fletcher would be involved in with the rebuilding of Christchurch after its earthquakes and flood repair in Queensland, he said.
• Fletcher is scheduled to release its half-year financial report next Wednesday.
