Steel & Tube shares fell to $1.40 from $1.50 at the open. They climbed as high as $1.73 on news of the increased offer. The stock was at $1.40 before Fletcher's interest was made public.
Fletcher had attracted support from Milford Asset Management and Harbour Asset Management in progressing its bid. Harbour Asset owns 6.5 percent of Steel & Tube and Milford owns 15.3 percent.
The bid was seen as opportunistic by investors given Steel & Tube had only just raised equity at a deep discount to shore up its balance sheet after a series of impairment charges and restructuring costs pushed it outside its lending covenants.
Steel & Tube highlighted likely opposition from the Commerce Commission in its initial rebuffing of the offer, and reiterated that concern to Fletcher, saying its adviser Chapman Tripp thought the proposed acquisition would face opposition given the larger company's vertical integration and size in several steel products markets. Fletcher reiterated its expectation that the regulator would have approved the deal, saying Steel & Tube's advice didn't account for imported products.
Fletcher shares rose 2 percent to $6.27.
- BusinessDesk
