The biggest shareholder in ailing trans-Tasman building products group Fletcher Building says the company should bite the bullet and sell its entire $NZ2.8 billion-a-year Australian business because it is a big drain on returns.

Perpetual Investments holds a 9 per cent stake in Fletcher Building and believes the Australian arm – comprising Tradelink, Stramit, Laminex and Fletcher Insulation – is a ''management distraction'' and should be cut loose.