Boral tells investors to reject new Seven Group bid

Boral has told shareholders to reject a boosted takeover offer from Seven Group, arguing it still undervalues the construction materials giant.

Boral said Seven’s bid was too low, with an independent expert’s report valuing its shares in a $8.25-$9.13 range. Picture: AAP

Boral has told shareholders to reject a boosted takeover offer from Seven Group, arguing it still undervalues the construction materials giant.

Seven lifted its existing $6.50 a share bid to $7.30 a share 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.

The price will lift to $7.40 a share if it reaches 34.5 per cent ownership by July 7 but its offer will not be lifted after that date.

Regardless, Boral said it was too low a bid with an independent expert’s report valuing its shares in a $8.25-$9.13 range.

“The Seven Group offer is opportunistic and appears to be timed to take advantage of an improving outlook for Boral,” the company said in a statement.

Seven Group first jumped into Boral just over a year ago when it snapped up a 10 per cent stake, handing it both exposure to an infrastructure-led recovery out of Covid-19 and also influence on the future direction of the company after a string of profit downgrades under previous boss Mike Kane.

Boral shares have more than doubled in the last year but there are still several points of tension between the company and its biggest shareholder.

While Seven Group chief executive Ryan Stokes is on the Boral board, its finance chief Richard Richards was forced to relinquish a director’s role after other high profile investors protested the move as handing the conglomerate too much influence.

Boral’s $US2.15bn ($2.9bn) sale of its US building products business also caused a fresh rift after the Kerry Stokes-chaired Seven Group claimed the unit had been sold for a loss and rushed through amid its takeover offer.

Boral told investors the sale price was well above the valuation range of up to $US2bn attributed to the business in the independent expert report.

John Wylie’s Tanarra Capital, a substantial Boral investor, said the deal beat market expectations while broker Jefferies said it was higher than its $US1.58bn valuation.

Boral rose 0.1 per cent to $7.36 on Thursday.