Boral Takeover: Seven Group Offers A$1.9 Billion to Take Full Control of Building Products Group
Australian diversified investor Seven Group Holdings has made a bold move, offering A$1.9 billion ($1.24 billion) in a bid to take full control of building products group maker Boral. This strategic move by Seven Group is a bet on Australia's infrastructure spending boom continuing in the coming years.
Led by billionaire Kerry Stokes and his family, Seven Group already holds nearly 72% of Boral. With this offer, they aim to acquire the remaining shares and gain complete control. The proposal includes a minimum offer of A$6.05 per Boral share, consisting of 0.1116 Seven Group shares and A$1.50 in cash. This values Boral at A$6.67 billion ($4.35 billion), a 3.4% premium to Boral's last closing price.
Seven Group proudly claims that their offer surpasses any closing price Boral has seen since 2007, highlighting the attractiveness of their proposal. Boral has been focused on reshaping its business over the past two years, concentrating on the Australian building and industrial products sector. This strategic shift was intended to leverage the increase in infrastructure spending by governments. As part of this plan, Boral has sold off several overseas assets and reduced its international footprint.
Following the announcement of Seven Group's offer, Boral's shares experienced a 3.7% increase. However, Seven Group's shares saw a slight decline of 1% in response to the news. Boral advised its shareholders to refrain from taking immediate action regarding the takeover bid. In addition, Boral announced the creation of an independent board committee to evaluate the offer objectively.
It's worth noting that Seven Group had previously attempted to take over Boral in 2021, but those attempts were rejected due to Boral's claims of undervaluation. Nonetheless, Seven Group managed to secure a 71% stake in the company throughout the year thanks to a strong domestic business environment driven by historically low-interest rates.
In a further show of commitment, Seven Group stated its intention to increase its offer by an additional 10 Australian cents. They would do so if they achieve an 80% stake in Boral, receive the unanimous recommendation of the offer from Boral's board, or both. Furthermore, there would be a further 10-cent increase if Seven Group's stake reaches 90.6%, which is the threshold for compulsory acquisition.
However, Seven Group has made a commitment not to purchase Boral shares for more than A$6.25 each for at least a year after the conclusion of the offer. This move aims to provide stability and reassurance in the wake of the potential takeover.
As the Boral takeover bid unfolds, investors and industry watchers will be closely monitoring the developments. The outcome of this high-stakes battle for control of Boral will undoubtedly have a significant impact on both parties involved and the broader Australian building products industry.
Analyst comment
Positive news: Australian diversified investor Seven Group Holdings has offered A$1.9 billion to take full control of building products group maker Boral. This reflects confidence in Australia’s infrastructure spending boom. Boral’s shares increased by 3.7% post-announcement.
As an analyst, it is likely that the market will continue to react positively, with the potential for an increase in Boral’s share price considering Seven Group’s intention to increase the offer.
