Kerry Stokes’ Seven Group lands $2.1bn Boral windfall
Kerry Stokes has added to his riches after Boral returned capital to shareholders following a string of corporate deals.
Kerry Stokes has added to his riches after Boral, controlled by the billionaire’s Seven Group conglomerate, returned $3bn to shareholders following a set of deals including the sale of its North American building products business.
Boral plans to return the bounty to shareholders after they overwhelmingly approved the capital return at its annual general meeting in October. Seven Group cashed in up to $2.1bn through its 70 per cent stake in the construction materials giant.
Shareholders will receive a cash distribution of $2.72 a share in the form of a $2.65 a share capital reduction worth $2.923bn and an unfranked dividend of 7 cents a share worth $77m, in keeping with its AGM vote. It will be paid on February 14.
“We are returning funds to our shareholders in an efficient way, consistent with our financial framework and focus on disciplined capital management,” Boral chief executive Zlatko Todorcevski said.
Boral sold its US building products unit to Houston-based manufacturer Westlake Chemical Corporation for $US2.15bn ($3bn) last June despite Seven Group claiming it should have received a bigger payday given strong US trading conditions.
It also offloaded its Australian timber business for $64.5m and Meridian Brick company for $US125m as part of a corporate cull that was partly triggered by the arrival of Seven Group on the register and its preference for an Australian focus.
The Sydney-based company, chaired by Seven Group chief executive Ryan Stokes, then called time on the US in December after more than 40 years with the sale of its fly ash business to Eco Material Technologies for $US755m, as it focuses on its construction materials business back home.
“In the 12 months following the sale of USG Boral and culminating with the announced sale of Boral’s North American Fly Ash business, we have completed an extensive portfolio realignment, unlocking significant value for our shareholders,” Mr Todorcevski said. “Our reshaped portfolio allows us to focus on strengthening the performance and profitability of our core Australian construction materials business.”
Mr Todorcevski has been working to restructure the business after several years of profit downgrades and underperformance under previous chief executive Mike Kane.
The company also sold its half share of the USG Boral plasterboard venture for $1.43bn in October 2020, placating high profile shareholders including Seven and Tanarra which had been agitating for asset sales.
Kerry Stokes stepped down as chairman of Seven Group in August 2021 in a major changing of the guard in corporate Australia following an audacious takeover raid at Boral.
His retirement from Seven Group followed less than a month after Ryan was appointed chairman of Boral, a company scooped up by the Seven camp in just over a year after it pounced on a string of profit downgrades that had hit Boral’s share price.
Seven Group now has extra incentive for a long-discussed infrastructure pipeline to be rolled out in Australia, given the potential for Boral and the broader conglomerate to boost revenues from any uptick in construction.
Seven Group said it was aligned with the Sydney building operator on strategy and backed Mr Todorcevski to deliver on its Australian goals after selling off much of its US business.
Kerry Stokes, 80 years-old, will retain his 57 per cent controlling stake in the diversified business that spans heavy machinery operator WesTrac through to the Coates equipment leasing business and a string of interests in energy and, most recently, construction materials with its Boral buyout.
Kerry Stokes, who assumed the role when the company was formed in April 2010, passed the Seven Group chair baton to former Coca-Cola Amatil boss Terry Davis, an existing board member of the company.
Boral rose 5.8 per cent to $6.21 on Tuesday.
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