Fletcher Building has withdrawn its takeover offer for Steel & Tube, after its increased puchase price was snubbed.
It had increased its offer for the steel manufacturer by 20 cents to $1.90 a share, with another 5 cents a share interim dividend to be added, which Steel & Tube's board said was still inadequate.
Fletcher Building chief executive Ross Taylor said the new offer was fair and had support from big institutional shareholders even if it rebuffed by the board.
"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to Steel & Tube shareholders, our engagement with the Steel & Tube Board has been unsuccessful and as a result we have withdrawn the acquisition proposal."
He said Fletcher Building was confident its offer would have been approved by the competition regulator, the Commerce Commission.
The new bid caused Steel and Tube's to surge to a near-five month high of $1.73, but once Fletcher withdrew the shares plunged more than 30 cents.
Steel and Tube's board had always dismissed Fletcher Building's interest as opportunistic and too low.
It said its own advice valued the company at between $1.95 and $2.36 a share, and added that it would take three or four weeks to get an independent report on the bid.
Mr Taylor said two of Steel and Tube's bigger shareholders -- Milford Asset Management and Harbour Asset Management -- were supporting its proposal, which was being frustrated by the delay in getting further advice.
"Fletcher Building has been engaging with Steel & Tube on a proposal for 5 weeks now, which has provided ample time for the Board to seek independent valuation advice," he said.
The takeover method Fletcher Building was proposing , a scheme of arrangement, needs a lower level of backing from shareholders to succeed, but also usually needs the backing of the directors of the target company.
Steel & Tube said it was keeping the door open for other offers.
"The revised non-binding indicative offer from Fletchers does not prevent higher value approaches from other interested parties," it said.