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The initial offer early last week buoyed Steel & Tube shares more than 20% to $1.59, but they had steadily eased back since then to $1.48 yesterday.
Since confirming the offer a week ago, Fletcher has been silent, but analysts have said the offer might have to upped.
Steel & Tube reported $53.8million of impairments and asset writedowns for its year to June, followed by an $81million capital raising, as it continues a drawn-out restructuring process.
Steel & Tube chairwoman Susan Paterson said yesterday Fletcher's approach was unsolicited and unwelcome.
''The fact that Fletcher made this indicative offer speaks to our reputation and the strength of our business,'' Mrs Paterson said.
In a letter to shareholders released through the NZX yesterday, Mrs Paterson said the company's board decided Fletcher's $1.70 offer ''significantly undervalues'' Steel & Tube.
She reiterated earning guidance of expectations of $25 million in earnings before interest and tax for its current financial year, plus resumption of dividend payments.
Mrs Paterson said the proposed acquisition would face ''challenging issues'' for clearance under the Commerce Act.
Separately, analysts last week speculated a merged Steel & Tube and Fletcher entity would amount to more than 50% market share in the steel sector, while the Commerce Commission ''brightline test'' for overall market share was a holding of less than 40%.
Mrs Paterson did not venture any comment on combined market share, but said that a Commerce Commission application would take ''some time'' to work through, due to Fletcher's vertical presence and significant size in several steel product markets.
''Our priority is the turn-around of the company and we continue to make positive progress under our Striving for Excellence strategy,'' Mrs Paterson said.