Revised NBIO of $1.90 to acquire S&T from Fletcher Building

Steel & Tube Holdings Limited (NZX: STU)'s Board advises that it has received a revised non-binding indicative offer (NBIO) from Fletcher Building Limited to acquire Steel & Tube and is arranging to appoint an independent expert. As advised to the market on 3 October 2018, Steel & Tube had received an earlier confidential NBIO from Fletcher Building to acquire the company at $1.70 per share. The Board did not support the indicative offer, for a number of reasons including: o The NBIO of $1.70 per share significantly undervalues Steel & Tube's Board's view of the company's value. o The proposed acquisition would face challenging issues for clearance under the Commerce Act that would take some time to work through, due to Fletcher Building's vertical presence and significant size in several steel product markets. Steel & Tube has now received a revised NBIO from Fletchers of $1.90 per share, with provision for a permitted dividend of up to 5 cents per share (imputed to the extent possible) (copy attached). The board remains of the view and has informed Fletcher Building that the company's value exceeds the revised price of $1.90 per share. In addition: 1. Steel & Tube's advisers' (First NZ Capital) view on Steel & Tube's intrinsic value is between $1.95 and $2.36 per share, excluding the company's share of synergies. 2. The permitted dividend does not adequately compensate shareholders for the extended timeframe realistically required to seek regulatory approvals. The revised offer of $1.90 per share implies an Enterprise Value (EV) of $341m and is only an 8.5x multiple of our long term sustainable earnings, assessed as FY21 EBIT of $40m. Comparatively, excluding the company's share of synergies, our advisers' valuation range is an implied EV of $346m to $414m. However Steel & Tube advises that in light of the revised offer the Board is commissioning an independent expert report which will take 3 -4 weeks, and will further consult its legal and financial advisers about the implications of the revised offer. Fletcher Building has been advised of this (copy attached). Chair of Steel & Tube, Susan Paterson, said: "The revised NBIO from Fletchers does not prevent higher value approaches from other interested parties. The Board will continue to evaluate strategies and actions that deliver the best value to shareholders and is continuing to focus on executing our turn-around strategy." ENDS For further information please contact: Mark Malpass Steel & Tube CEO Tel: +64 27 777 0327 Email: mark.malpass@steelandtube.co.nz End CA:00325268 For:STU Type:MKTUPDTE Time:2018-10-15 08:30:09