Steel & Tube details rival’s ‘unwelcome’ offer
Steel & Tube has described Fletcher Building’s attempt to take it over as an ‘‘unsolicited and unwelcome’’ approach.
Steel & Tube chairwoman Susan Paterson wrote to shareholders explaining why the construction supplies company had turned down a non-binding indicative offer from Fletcher, one of its largest competitors.
The embattled construction company proposed to acquire all of Steel & Tube’s shares at a price of $1.70 each. It has held conversations with shareholders and the Steel & Tube board.
Fletcher said earlier that shareholders, who collectively own more than 20 per cent of all Steel & Tube shares on issue, confirmed their position that the board of Steel & Tube should, in good faith, progress the development of the proposal with Fletcher, with a view to it being put to Steel & Tube shareholders.
But Paterson said the offer undervalued the board’s view of the company’s value and would give Fletcher too much dominance in the marketplace.
‘‘The proposed acquisition would face challenging issues for clearance under the Commerce Act that would take some time to work through, due to Fletcher’s vertical presence and significant size in several steel product markets,’’ she wrote.
She also said Fletcher’s approach was unsolicited and unwelcome.
‘‘Obviously Fletcher see a lot of value in our business and its future potential, as do we, with both board and management personally investing further in the company through the recent capital raising.
‘‘This approach [by Fletcher] does not prevent higher-value approaches from other interested parties and your board will continue to evaluate strategies and actions that deliver the best value to shareholders. Our priority is the turnaround of the company.’’
She said Steel & Tube had a well-balanced exposure across the manufacturing, construction and rural sectors.
‘‘Our goal is to be the leader in buying, selling, processing and placing steel in New Zealand.’’
Steel & Tube recently confirmed earnings guidance of $25 million before interest and tax for the financial year ending on June 30, 2019, and its intention is to resume payment of dividends in this financial year.