Boral rejects Stokes’ Seven Group’s $3.1bn takeover bid as ‘unfair’
The building materials giant has rejected a $3.1bn takeover bid from the Stoke’s family’s Seven Group after expert advice the offer was below par and not fair.
Building materials giant Boral has rebuffed a $3.1bn takeover offer by the billionaire Stokes family’s Seven Group saying the bid was not enough.
The decision comes a day after stockbroker Aitken Mount Capital Partners said the money on the table from Seven was “on the cheap,” and called for Boral to remain independent.
Seven Group, which is led by Ryan Stokes, is looking to mop up the 28.4 per cent of Boral that it does not already own as it bets on future growth in the building sector.
Mr Stokes yesterday warned non acceptance of the offer “runs the risk of stranding shareholders in an illiquid position with no dividends.”
However, Boral’s independent expert Grant Samuel said the offer was “not fair and reasonable” adding the fair market value falls between $6.50 and $7.13 a share, below Seven Group’s offer of between $5.96 to $6.19.
The construction sector is undergoing a period of consolidation with Boral’s rival CSR recently agreeing to a $4.32bn takeover offer from French building giant Saint-Gobain.
CSR, established in 1855 initially as a sugar refining business, now has a wide portfolio of building products including Monier Roofing, PGH Bricks and Gyprock.employees and contractors. Boral is one of Australia’s largest construction materials company and quarry operator, with about 7,500 staff. Boral’s bid response committee, led by Rob Sindel, on Tuesday recommended shareholders reject the offer by taking no action.
The company, under the leadership of Vik Bansal, is looking to rebuild its business after major restructuring, which included cutting costs and a flurry of asset sales as the group retreated from its ill-fated ventures in the US market. Each of Boral’s directors intend to reject the offer in relation to their shares.
Mr Stokes said that while Seven Group respected the work that the bid response committee has put into arriving at the recommendation, “we obviously disagree with their assessment strongly.” “We declared our offer ‘final’ immediately because on any metric it is a fair value for minority shareholders,” said Mr Stokes, “Not only it is at a higher earnings multiple than recent and comparable transactions in the sector, our potential maximum consideration represents almost 31 times Boral’s December 2023 price to earnings multiple.”
He said the independent expert has valued Seven Group’s offer at up to $6.39 per Boral share – a mere 1.5 per cent below the expert’s own range. “Importantly, Boral shareholders who accept the offer can maintain exposure to future growth in the assets within the Seven Groupt hat has a history of strong dividends and better total returns than Boral stand alone,” he said. “We will continue to take this offer forward to shareholders directly, and make sure that retail shareholders – who represent half the free float – understand that non acceptance runs the risk of stranding them in an illiquid position with no dividends’.
“We have been completely transparent in our bidder’s statement about our intentions for Boral when it comes to board representation, capital management and a potential delisting.”
Since Seven Group’s bid opened on March 4, only 1.06 per cent of Boral’s total share capital have accepted the offer. An unnamed Boral director encouraged shareholders to remain with
Channelling iconic movie character Darryl Kerrigan of The Castle, stockbroker Aitken Mount said Boral shareholders should tell Seven ‘they’re dreamin’ “Seven Group’s bid for Boral is on the cheap,” Aitken Mount said. “Don’t allow billions of value be transferred to Seven.”Aitken said family offices - funds run by wealth families - had the opportunity to acquire a 10-15 per cent stake in the company with the potential to more than double earnings in the long term. “There is far greater potential for upside in Boral as an independent entity than as part of Seven Group,” said Aitken. Seven Group earlier this month moved to garner takeover support from Boral shareholders for its takeover of the building group by improving the payment terms and removing all conditions.
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