NZ Steel grabs blocking stake in Steel & Tube

NZ Steel has agreed to pay $45.98 million - or $1.75 each - for 26.3 million shares in the Steel & Tube. Photo / File

New Zealand Steel has paid a 17 per cent premium for a blocking stake in distributor Steel & Tube Holdings, the latest move in an ongoing tussle for the Lower Hutt-based steel products supplier.

NZ Steel, a unit of BlueScope Steel and operator of the Glenbrook steel mill, has agreed to pay $45.98 million – or $1.75 each - for 26.3 million shares in the Steel & Tube. The purchase of almost 16 per cent of the company from three funds managed by Milford Asset Management was agreed yesterday and is expected to settle on Friday.

Steel & Tube shares jumped 7.4 per cent to $1.60.

NZ Steel, which acquired Fletcher's Pacific steel and rolling mill in 2014, is a major supplier of long products, reinforcing, and coloured roofing. Its brands include Colorsteel, Axxis and Zincalume.

Parent company BlueScope today said it has no intention of taking over Steel & Tube.

NZ Steel is paying a small premium to the $1.70 Fletcher Building offered for the business in early September as part of its plan to deepen its steel distribution activities and widen its product range.

Milford had been a backer of Fletcher's bid, which Steel & Tube rebuffed. Fletcher improved its offer to $1.90, and left scope for a 5 cent special dividend, but withdrew that on Monday after the Steel & Tube board again rejected it pending commissioning of an independent appraisal.

NZ Steel reported an 11 per cent increase in sales to A$833.6 million ($903.8m) in the year ended June 30. Earnings before interest and tax rose 28 per cent to A$111.7m on stronger domestic and export prices and about A$40m of cost savings.