Tuesday, September 30, 2008

OneSteel lodges notice of intention to make $4.00 cash offer for Steel & Tube

OneSteel Limited (ASX: OST) today announced that its wholly owned subsidiary OneSteel NZ

Holdings Limited (“OneSteel”) has given notice to Steel & Tube Holdings Limited (NZX: STU)

(“Steel & Tube'”) of its intention to make a cash offer for all of the shares in Steel & Tube that it

Does not already own (the “Offer”). OneSteel is the largest shareholder in Steel & Tube and owns

50.27% of the shares on issue.

OneSteel’s offer price of NZ$4.00 cash per Steel & Tube share would provide all Steel & Tube

Shareholders with the opportunity to realise a very attractive value for their shares. OneSteel's

Offer is subject to limited conditions and, importantly, is not subject to OneSteel raising finance.

Peter Smedley, OneSteel Limited's Chairman, said:

"If OneSteel's offer proceeds, Steel & Tube shareholders will have the opportunity to sell their

Shares for cash at a significant premium. 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."

OneSteel is seeking a unanimous recommendation from the Steel & Tube Board, in the absence of

A superior proposal.

The Steel & Tube Board has indicated that it intends to obtain an Independent Adviser’s report in

Relation to the Offer before making a formal recommendation to Steel & Tube shareholders.

Consequently, OneSteel has today lodged a takeover notice, which will facilitate Steel & Tube’s

Appointment of an Independent Adviser that is approved by the New Zealand Takeovers Panel.

Assuming the Steel & Tube Board recommends the Offer, OneSteel expects to despatch the offer

Document within four weeks.

The Offer price of NZ$4.00 cash per share:

• represents a 33% premium to the last price of Steel & Tube shares traded on NZX on 26

September 2008, being the last trading date prior to this announcement;1

• represents a 17% premium to the volume weighted average price of Steel & Tube shares

Traded on NZX during the month ended on 26 September 2008;

• represents a 31% premium to the volume weighted average price of Steel & Tube shares

Traded on NZX during the 3 months ended on 26 September 2008;

• is significantly higher than the average of broker analyst price targets of NZ$3.66 per

Share2 and broker analyst valuations of NZ$3.82 per share;3 and

• values Steel & Tube at an enterprise value of NZ$437.9 million, which represents a 2008

EV/EBITDA multiple of 9.6x.4 This is significantly higher than other comparable steel

Distribution transactions.

1 Steel and Tube closing share price on 26 September 2008 was NZ$3.00.

2 Average of price targets published by 7 brokers, being ABN AMRO, Citi, Credit Suisse, Forsyth Barr,

Goldman Sachs JBWere, Macquarie and UBS, from reports published post 14 August 2008.

3 Average of valuations published by 7 brokers, being ABN AMRO, Citi, Credit Suisse, Forsyth Barr, Goldman

Sachs JBWere, Macquarie and UBS, from reports published post 14 August 2008.

Geoff Plummer, OneSteel Limited's Managing Director and Chief Executive Officer, said:

“If OneSteel's offer proceeds, it will allow OneSteel to simplify its corporate structure and efficiently

Manage the Steel & Tube business as part of the OneSteel group.”

“OneSteel's proposal confirms its commitment to the New Zealand market and to Steel & Tube’s

Business, employees, customers and suppliers. If OneSteel's offer proceeds, OneSteel intends to

Retain the Steel & Tube brand, grow the Steel & Tube business and maintain a quality product

Offering and high level of service.”

Based on the Offer price of NZ$4.00 per share and excluding transaction costs, OneSteel expects

The transaction to be EPS accretive in the first full year following its completion of the transaction

And thereafter.

OneSteel intends to fund the Offer entirely from existing debt facilities.

The Offer is subject to limited conditions, including OneSteel receiving sufficient acceptances to

Increase its shareholding in Steel & Tube to at least 90%, Overseas Investment Office approval

And the NZX50 does not close below 2,710 on three consecutive trading days between today and

The end of the period by which the offer must become unconditional.


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