New Zealand’s struggling building and construction giant, Fletcher Building has abandoned its bid for Steel & Tube Holdings after its sweetened offer was rejected.
Steel & Tube’s shares were steady at $NZ1.50 on Monday on the NZX, compared with a year-high of $US2.064 in January. Fletcher shares fell 5 cents to $NZ6.10.
Fletcher launched its bid five weeks ago in September and then lifted it on Monday morning to meet complaints from Steel & Tube that it significantly undervalued the company.
Fletcher raised its offer from $NZ1.70 to $NZ1.90 a share plus a special dividend of up to 5 NZ cents a share once the deal is done.
But hours later, Fletcher said it was pulling its offer due to “lack of support from Steel & Tube’s board to progress the proposal in a timely manner”.
Steel & Tube had said it would take three to four weeks to get an independent valuation on the second offer. It had also told shareholders both bids were, in its view, too low.
Fletcher Building said it had been “engaging with Steel & Tube on a proposal for five weeks now, which has provided ample time for the board to seek independent valuation advice”.
Fletcher bid to try to take advantage of a weak annual profit from Steel and Tube which reported a 60% slide in earning after writing down the value of its assets, exiting its plastics business and flagging impairment charges in May.
Analysts say it will now be up to Steel and Tube to justify the rejection by producing an upturn in earnings.
Fletcher Building CEO Ross Taylor said in the statement: “Despite offering what we believe was a very attractive offer to Steel & Tube shareholders, our engagement with the Steel & Tube Board has been unsuccessful and as a result, we have withdrawn the acquisition proposal.”
