James Hardie’s $14bn buyout proposal for fellow building materials company Azek has created an investor firestorm in Australia and the US, where three law firms are threatening legal action because the price is too low.
James Hardie shares fell a further 5 per cent on Tuesday, adding to the fall of almost 15 per cent on Monday and wiping more than $3bn from Hardie’s Australian market value.
On Monday night in the US, law firms Rowley Law, Rigrodsky Law and Wohl & Fruchter said they were investigating the fairness of the deal after its sale price was below the target price of at least nine Wall Street analysts.
Morgan Stanley analysts in Australia said in a research note that James Hardie had paid “a heavy premium and an elevated multiple” for the company that makes timber outdoor living products such as decking, rail and accessories.
James Hardie predominantly makes fibre cement and gypsum building materials products.
“We expect that the market will be sceptical of revenue synergy targets,” the Morgan Stanley analysts said.
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