Stainless deal helps push expansion

Steel & Tube is closer to expanding its stable after its deal to buy local stainless-steel distributor NZF Stainless Group went unconditional yesterday.

After flagging the acquisition last month, the company said it would buy the trading assets of NZF Stainless for about $11 million subject to due diligence.

That will be paid in cash and is subject to adjustment based on net assets on April 3.

Lower Hutt-based Steel & Tube, already the country's largest distributor of steel and steel products such as roofing, pipes, wire and metal fasteners, now had the opportunity to grow into the stainless steel market worth $200 million, said chief executive Nick Calavrias.

Stainless, which employs 80 people at eight branches, would keep trading as a separate division. It was unlikely to contribute to bottom line earnings until the 2006/2007 financial year.

Stainless was formed by Mac Armstrong in the mid 1960s.

It imports all its products and distributes to the construction, dairy, food processing, architectural and marine industries, with sales of about $40 million and operating profit of $1 million last year.

Last month, Steel & Tube reported a $2 million or 10.5 per cent fall in first-half profit to $17.68 million as high interest rates and the strong kiwi dollar made market conditions "challenging".

Steel & Tube's shares fell 9c to $4.10 yesterday as the stock went ex-dividend.