Page 8 - HW April 2022

hard news
Fletcher Distribution
stakes a claim in Hawke’s Bay
LATE LAST MONTH came confirmation that Fletcher Distribution (FDL) was looking to acquire the six Tumu Merchants Ltd-owned and ITM-branded stores in Hawke’s Bay (Gisborne, Napier, Hastings, Havelock North, Dannevirke and Masterton), along with the Hastings frame & truss plant.
Plus, with the Commerce Commission’s announcement of and call for input into FDL’s application for clearance to acquire the Tumu assets, came the additional confirmation that Tumu would be relinquishing its shareholdings in the ITM cooperative at the end of April.
Given the Commerce Commission’s go-ahead (feedback on its a Statement of Preliminary Issues was due on 22 April and a final decision on 19 May), it is logical that the stores will eventually be branded as PlaceMakers, although according to the clearance application: “Post-acquisition, the Tumu stores ... will be TUMU branded for a [so far unspecified] period.”
In terms of FDL’s motivation for
the deal, with no PlaceMakers stores
in Gisborne or Dannevirke and just “a modest presence” in Hawke’s Bay and Wairarapa, FDL is clearly looking to boost its “limited presence” on the East Coast of the North Island.
Saying he has enjoyed working in building supplies over the last several decades, Tumu Group Managing Director John O’Sullivan says the decision
to sell the stores and plant to FDL is
part of a long-term strategy to focus
on the development of other growth opportunities within the building industry.
“This is something we have been considering over recent years and we felt the time was right,” he says.
“In making the decision to sell the building supplies and frame & truss operations, we wanted to find a buyer where our businesses would fit well, particularly for our management, shareholders, staff and customers and with whom our values aligned.
“FDL could see that we offered them a strong distribution footprint along the East Coast and they like the way the businesses are run,” he adds.
Under FDL’s ownership, Tumu ITM will initially become known as TUMU, and will no longer operate as a member of the ITM cooperative, confirms John O’Sullivan.
“In every other way, it will be business as usual, and all 180 staff will continue under existing contracts and benefits,” he says.
Provided the Commerce Commission gives its approval to the transaction, it is expected that the TUMU operation will
transition to FDL mid-year.
Tumu Group can then focus full time
on its timber manufacturing businesses – including bin and pallet manufacturing and timber wholesale – along with its property development business, Tumu Developments.
For its part, according to an inclusion in FDL’s application, ITM is already working to fill the gap in its network, saying: “Watch this space. We aim to be back in town and back to serving our loyal trade customers as soon as we can.”
In a statement, ITM CEO Darrin Hughes had this to say: “The TUMU Group has now accepted an offer from Fletcher Building to shift from private ownership to corporate ownership (subject to Commerce Commission approval).
“ITM will be interested to understand how the Commerce Commission views this acquisition, especially against the context of the current market study into competition in the building products sector.”
Still, despite the big gap created by the “disappointing departure” of the TUMU Group, with its national network of 97 stores and 25 frame & truss plants across New Zealand, Darrin Hughes asserts that ITM “continues to flourish as a preferred supplier in trade” and confirms that the co-op is actively considering its options in the region.
6 NZHJ | APRIL 2022
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