Boral rejects Seven Group criticism of buyback

Boral’s boss says there is no merit in suitor Seven Group’s demand that the building products group halt its buyback.

Boral chief executive Zlatko Todorcevski in Sydney. ‘We have ensured the market is fully informed.’ Picture: Jane Dempster/The Australian.

Boral boss Zlatko Todorcevski has hit back at accusations by spurned suitor Seven Group that the company’s ongoing share buyback program threatens its “credibility and reputation”, as tensions in the battle for control of the building products company escalate.

Kerry Stokes’ Seven Group lifted its $6.50 a share offer for Boral stock on Thursday said it was now targeting control of 34.5 per cent of the company’s register.

The latest exchange of hostilities come as Boral continues its share buyback program, which could limit Seven Group’s ability to continue to creep up its register after the improved offer closes on July 15.

Seven Group on Friday accused the building products company of wasting shareholder cash by continuing to buy back its own shares after the end of the financial year, demanding a halt to the buyback because Boral executives were privy to information not in the public domain.

Boral acquired $35.9m of its own shares on July 1, taking its total buyback to $536.9m, and a spokeswoman for Seven Group said its decision to keep buying after the close of the financial year was poor conduct, noting Boral had committed to not use the buyback as a takeover defence tool.

“Following the close of the financial year, the company is in possession of material information on the performance of the business, particularly the underperformance of Boral Australia, which has not been adequately disclosed to the market in the target’s statement.

“This conduct by the board and management risks threatening the credibility and reputation of Boral. It also introduces concerns related to legal compliance and the appropriate use of shareholders’ funds,” she said.

“Seven Group expects the board to suspend the buyback during the blackout period, consistent with the company’s last buyback in 2015. Following the close of the Seven Group offer, we look forward to returning to the board room and participating in any decisions around capital management and will make sure the company acts prudently with shareholders’ funds.”

But Mr Todorcevski said Seven Group’s takeover offer meant the market was properly informed about Boral’s position.

“There is no merit in the comments by Seven Group today. We are not in a blackout period. The arbitrary start of the traditional blackout period assumes that you do not have enhanced disclosure as you have in a takeover,” he said.

“In the current situation, which is entirely a result of the Seven Group offer, we have ensured the market is fully informed, with all material information about Boral and its prospects contained in the target’s statement, including guidance for the 2021 financial year.”

Boral on Thursday told shareholders to reject a boosted takeover offer from Seven Group.

It had lifted its existing $6.50 a share bid to $7.30 a share earlier on Thursday after securing 29.5 per cent of Boral’s register, reaching a threshold it set a week ago that could see up to 90c a share added to its original bid.

Seven Group will lift its offer to $7.40 a share if it controls a 34.5 per cent stake in Boral by July 7.

Boral shares closed unchanged at $7.36 on Friday.