OneSteel, which holds a 50.27 per cent interest in Steel & Tube, was offering $NZ4.00 for every share in the company it doesn't own, valuing the deal at about $NZ175.47 million ($A157.49 million).
"The situation has changed dramatically since OneSteel NZ announced its intention to make an offer for Steel & Tube last month,'' OneSteel managing director Geoff Plummer said in a statement.
"Market volatility has increased and the outlook for Steel & Tube is more uncertain as a consequence of its exposure to the New Zealand economy.''
Steel & Tube is New Zealand's largest distributor of steel and allied products, and was formed in 1953 through the merger of three importers and distributors of steel product.
OneSteel said the rationale behind the takeover was to simplify its corporate structure and efficiently manage the Steel & Tube business as part of the OneSteel group.
Shares in OneSteel shed 1 cent to close at $3.51.
OneSteel, formerly Tubemakers of Australia, acquired an initial eight per cent holding in 1984, to facilitate the exit of family interests, and progressively increased that stake to 46 per cent by 1988.
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