OneSteel bids for NZ's Steel and Tube

OneSteel seeks full control of NZ firm.
ONESTEEL has moved to take advantage of New Zealand's economic downturn, intending to bid $NZ175 million ($145 million) to buy the half of that country's Steel & Tube Holdings it does not own. OneSteel, which already owns 50.3 per cent of Steel & Tube, said it would offer $NZ4 cash a share for the remaining stock, which is a 33 per cent premium to Friday's close. "The opportunity for all Steel & Tube shareholders to be able to receive cash is attractive given the illiquid market for Steel & Tube shares and the current economic uncertainty and market volatility," chairman Peter Smedley said. OneSteel said the purchase, which it would fund from existing debt facilities, would allow it to simplify its corporate structure and would be earnings accretive from the first year. Presenting to analysts in New Zealand, OneSteel said the steel price cycle appeared to have peaked this year, with continued volatility expected. This was a more downbeat appraisal than in its full-year results last month, when OneSteel said it expected prices to be volatile but remain at high levels, underpinned by strong demand. OneSteel said it expected to make an offer on October 29 and that it was seeking a unanimous recommendation from the Steel & Tube board in the absence of a better offer. The offer is conditional on 90 per cent acceptance, regulatory approval and the NZ stock market staying above a certain level.