Steel & Tube receives $282 million takeover offer from Fletcher Building

Fletcher has offered $1.70 a share, which cumulatively values the company $282 million. Photo/File.

Steel & Tube's said it had received a takeover offer form Fletcher Building at $1.70 a share, which it said "significantly undervalues" the company.

The cumulative value of the business is $282 million.

The company said the board had considered the non-binding indicative offer, received on 10 September, from Fletcher Building and had sought expert legal and commercial advice.

The board said proposed acquisition would need clearance under the Commerce Act, "which would take some time to work through due to Fletcher's vertical presence and significant size in several steel product markets".

Steel and Tube is involved in steel distribution, processing and fabrication. The company's shares last traded at $1.36.

"Obviously Fletchers sees a lot of value in our business and its future potential as the benefits of our turn-around strategy start to become clear… as do we," Steel and Tube chair Susan Paterson said in a statement.

Steel and Tube recently reaffirmed its 2019 guidance of earnings before interest and tax of $25 million on the back of the continuing positive progress being made under the company's "striving for Excellence" strategy.

"The company has a clear focus on growth and improving financial performance as it positions itself as New Zealand's leading supplier of steel products," Paterson said.

"While the market remains highly competitive, Steel & Tube continues to win new customers, sign large contracts, increase efficiencies and reduce costs," she said.

Steel & Tube's went through a successful capital raising early this year.

"The board and Management are confident in the improving performance of the company, and remain focused on providing high-quality steel solutions and products and delivering value for employees, customers and shareholders," she said.

Fletcher Building's shares last traded at $6.56.

Sign up to the NZ Herald Business page on Facebook for latest news, commentary, data and analysis​