Seven Group seeks support for $3.1bn takeover of Boral

The Stokes family-controlled company has moved to bolster takeover support from Boral shareholders for its $3.1bn takeover of the building group by improving the payment terms and removing all conditions.

Seven Group has moved to garner takeover support from Boral shareholders for it $3.1bn takeover of the building group by improving the payment terms and removing all conditions.

If Boral shareholders accept the offer, they will be issued with Seven Group shares and sent to payment within seven business days on the date the offer was accepted from 14 business days.

Seven Group, which is majority owned by the Stokes family, is looking to buy the 28.4 per cent of Boral that it does not already own as it bets on future growth in the building sector.

The ASX-listed company had previously offered 0.1116 Seven Group shares and $1.50 cash for each Boral share it does not already hold. This represented an aggregate value of $6.05 per Boral share.

If more than 80 per cent of Boral shareholders accept the offer and the Boral board recommends the deal, the cash component will rise to $1.70, taking the offer to $6.25 per share. Seven Group has established an acceptance facility in relation to the off-market takeover bid for all of the ordinary shares in Boral.

The facility is open to all Boral shareholders to facilitate the receipt of their acceptances of the offer. The facility enables Boral shareholders to indicate their intention to accept the offer without being obliged to do so until the first consideration increase is effective. Boral shares fell 0.3 per cent to $6.03 in morning trade.

Boral has again told shareholders to ‘take no action’.

Boral’s concrete plant in Botany.

Boral is seeking to rebuild its business under the leadership of Vik Bansal, after the massive restructuring of the company under predecessor Zlatko Todorcevski – which included substantial cost-cutting and a massive wave of asset sales as the company retreated from its ill-fated ventures in the US market.

At the same time, Boral faces a tougher environment over the next few years as inflation feeds through the general economy and the massive infrastructure spending programs from governments across Australia start to slow.

Boral is now trading at about 25 times its net profit and has proved there is still money to be made in the building materials industry even against the soft economic backdrop.

Boral is one of Australia’s largest construction materials company in Australia, employing about 7,500 employees and contractors.

The deal comes amid increasing consolidation in the building materials sector. Last week, CSR agreed to a $4.32bn takeover offer from French building giant Saint-Gobain that includes accepting liability for the Australian company’s historic asbestos claims.

Paris-based Saint-Gobain will pay $9 per share for all of the 169-year-old Australian company as the Paris-based multinational seeks to establish a leading position in the Australian construction materials sector.

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.