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Boral (ASX:BLD) - Chairman, Kathryn Fagg
Chairman, Kathryn Fagg
Source: Herald Sun
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  • Boral (BLD) has, once again, urged its shareholders to reject a takeover bid from Seven Group (SVW) ahead of the June 30 deadline
  • In May, Seven offered to purchase all of the shares it does not already own for $6.50 each
  • Seven holds a 24.19 per cent stake in Boral and is legally unable to buy any more shares on-market until October due to “creep provisions”
  • Boral maintains that the offer significantly undervalues the company and urged its shareholders to take no action
  • Shares in Boral are currently up 0.44 per cent to $6.90 as of 12:58 pm AEST

Boral (BLD) has, once again, urged its shareholders to reject a takeover bid from Seven Group (SVW) ahead of the June 30 deadline.

In an off-market proposal lodged on May 10, Seven offered to purchase all of the shares it does not already own for $6.50 each, valuing the building materials supplier at roughly $8 billion.

The Kerry Stokes-controlled investment group, which currently holds a 24.19 per cent stake in Boral, said it would be happy if the proposal resulted in a 30 per cent interest, but that it had to make a bid for all of Boral’s shares due to securities regulations known as “creep provisions.”

Boral was quick to respond, saying the offer was “opportunistic” and undervalues the company.

That sentiment was reiterated this morning by Boral’s Chairman Kathryn Fagg, who urged the company’s 80,000 shareholders to dismiss the proposal.

“We continue to believe the SGH Offer significantly undervalues your shares in Boral and encourage all shareholders to REJECT the offer by TAKING NO ACTION,” she said.

It comes as Seven drops all the conditions that had previously been necessary to complete the deal, and said that any shareholders who decided to sell would be paid within seven days. The proposal had also been due to expire on June 17, but has been extended until June 30.

Since the early months of the pandemic, Seven has been steadily increasing its stake in Boral, starting with a 10 per cent holding that was accumulated between March and June last year. 

It continued buying, and by September had a 20 per cent interest, which was then bumped to a 23.18 per cent stake in April this year.

Section 6 of the Corporations Act 2001 provides that, because Seven holds an interest in Boral greater than 20 per cent, it can only purchase an additional three per cent stake every six months — “creep provisions” — meaning Seven is legally unable to buy any more shares on-market until October.

An off-market bid for all of Boral’s shares is Seven’s attempt at getting around these regulations.

In a defensive move, Boral has been busy executing a series of share buy-backs that began in April, and has since reclaimed around $700 million of its on-market capital.

Details of an independent valuation by advisory firm Grant Samuel were released yesterday at the same time Boral announced the $2.9 billion sale of its North American building products arm to a subsidiary of NYSE-listed Westlake Chemical Corporation.

Grant Samuel, in the report dated June 10, put the value of Boral’s entire business at between $9.7 billion and $10.8 billion, which corresponds to a share price of between $8.25 and $9.13 — significantly higher than the offer of $6.50 per share presented by Seven.

Bolstering Boral’s resilient position is the fact that its share price has remained well above $6.50 since Seven made its bid in May.

Shares in Boral are currently up 0.44 per cent to $6.90 as of 12:58 pm AEST.

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