Australia’s largest steelmaker and owner of the New Zealand Steel mill, BlueScope Steel, has gained approval to acquire the assets of Fletcher Building’s Pacific Steel in a $NZ120 million ($A111.
73 million) deal.
The Commerce Commission on Wednesday said that while the acquisition will leave BlueScope as the only New Zealand producer of flat steel and long steel products there wasn’t an overlap between the two businesses and prices would continue to be influenced by imported product.
“The products supplied by BlueScope and Pacific Steel can be sourced through imports and the import price strongly influences the prices that BlueScope and Pacific Steel are able to charge,” commission chairman Mark Berry said in a statement.
“Post-merger, imports will continue to provide pricing pressure on the merged business.”
The companies want to complete the transaction by the middle of the year. As a result, Fletcher plans to close its steel mill at Otahuhu at the end of 2015 with the loss of around 70 jobs.
Melbourne-based BlueScope will pay $NZ60 million for Pacific Steel’s long-products rolling and marketing operations and pay about $NZ60 million for the target’s working capital, Fletcher said in February.
Bluescope will pay half the $NZ60 million price of the assets upfront and the remainder once it has commissioned a new billet caster, expected to be by the end of 2015.
The Australian company will build the billet caster at the Glenbrook mill south of Auckland operated by its NZ Steel unit, spending about $NZ50 million on the new plant.
Until then, Fletcher will continue to operate the Otahuhu mill and supply BlueScope with billet on commercial terms.
The sale includes Pacific Steel’s rolling mill and wire drawing facilities at Otahuhu and its Fijian rolling mill. Once Bluescope’s billet caster is running, NZ Steel will supply billet to the rolling mills at Otahuhu and in Fiji.