Steel & Tube continues acquisition drive, buying Aquaduct NZ out of receivership

Steel & Tube Holdings [NZX: STU], New Zealand's biggest steel distribution company, has continued its drive to grow through acquisitions, buying Aquaduct NZ out of receivership for about $8 million cash.

Aquaduct was put into receivership in April after defaulting on its debt facilities with Westpac NZ, which was owed $4.97 million, according to a report by BDO's Stephen Tubbs. Steel & Tube itself is listed among creditors, owed $870, part of Aquaduct's total liabilities of $8.18 million.

The receiver kept the business trading, while seeking to sell the business as a going concern. Aquaduct specialises in large bore long-length polyethylene pipe and Steel & Tube is also buying associated company Bosch Irrigation, which was put into receivership in May.

No mention was made of two other related entities in receivership, Canpower and Gely Holdings.

The companies were owned by Gerard van den Bosch and other members of the van den Bosch family. Aquaduct and Gerard van den Bosch won the IrrigationNZ Innovation Award in 2014 for an onsite factory that produced irrigation pipe for the Valetta Irrigation Scheme's underground pipe network in Canterbury.

"We see Aquaduct as a great company with an innovative and exciting product offering that complements our core business," Steel & Tube chief executive Dave Taylor said. He expects the deal to be completed in the next month.

Aquaduct will continue as a separate entity, Steel & Tube said. It employs about 30 people.

Earlier this month, Steel & Tube reported a 20% gain in full-year profit, saying recent acquisitions had helped provide a buffer against slowing economic growth and weakness in global finished steel prices. The company agreed to acquire fastener maker Manufacturing Suppliers for $32 million in cash and scrip last month, having acquired Tata Steel (Australasia) for $28.1 million, renaming it S&T Stainless, last year.

Steel & Tube shares last traded at $2.68 and have dropped about 11% in the past 12 months. The stock is rated a 'buy' based on the consensus of four analysts polled by Reuters.