Fletcher Building won’t keep chasing Steel & Tube Holdings after failing to win over the board with its latest offer. 

The country’s biggest listed construction company was willing to pay $1.90 a share and let Steel & Tube pay a 5 cents per share special dividend, which it says was an attractive offer. The initial bid $1.70 was rejected as too low by Steel & Tube, but the steel products maker’s board was willing to get an independent expert look over the increased offer. 

That won’t need to happen with Fletcher Building walking away saying Steel & Tube has had ample time to get an independent valuation. 

“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to Steel & Tube shareholders, our engagement with the Steel & Tube board has been unsuccessful and as a result we have withdrawn the acquisition proposal,” chief executive Ross Taylor said in a statement. 

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. 

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