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Boral resists buyout bid from Stokes' Seven Group


Boral is urging shareholders not to take up an offer by Kerry Stokes’ Seven Group Holdings to buy out the building products and construction materials group.

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Seven Group Holdings, which owns a 40 per cent stake in Seven West Media, 28.5 per cent of SA-based Beach Energy and all of Coates Hire is led by business tycoon Stokes, who is executive chairman, and his son Ryan, the group’s managing director and CEO.

Publicly-listed SGH already owns 23 per cent of Boral and last night made an offer to buy all of the remaining shares in Boral it does not already own, valuing the building materials supplier at $A7.91 billion.

Based on Seven’s current stake in Boral, it would have to pay more than $6 billion to buy the remaining shares.

But Boral responded with a statement to the Australian Securities Exchange this morning, urging shareholders to reject the offer.

Sydney-based Boral, with Australian and North American divisions, has more than 17,000 employees and contractors across 650 operating and distribution sites globally, including in Adelaide.

It has formed a committee of its directors, excluding Ryan Stokes, to consider the offer.

“This committee believes the offer is opportunistic, undervalues the company and unanimously recommends that shareholders reject the offer once it opens by taking no action,” this morning’s statement by Boral to the ASX said.

“Boral management remain committed to the company’s strategic goals including the transformation targets set across the group and the ongoing process in relation to its North American portfolio.”

The Seven Group offer price of $6.50 per share is equivalent to the stock’s price at yesterday’s market close.

The offer is expected to open on May 25 and close on June 25.

Because its interests exceed 20 per cent and it has recently utilised its “creep” capacity by acquiring an additional 3 per cent of shares, Corporations Act restrictions prevent SGH from acquiring further Boral shares on market at this time, prompting the takeover offer to all shareholders.

“In making the offer, SGH is seeking to increase its interest in Boral and would be satisfied for the Offer to result in it holding a total interest of around 30 per cent of Boral,” Seven Group said in its statement last night.

Boral shares were up slightly this morning to $6.57 at 11am, their highest level since October 2018.

The company’s share price has been steadily rising since it bottomed out in March last year at $2.01 at the beginning of the COVID-19 pandemic.

Boral cited internal challenges the global COVID-19 pandemic and the devastating impact of the Australian bushfires for a “challenging” 2020 financial year when the company reported a $177 million net profit after tax.

This was down from $419 million the previous year and did not include a net non-cash impairment of $1.3 billion, resulting in a statutory net loss after tax of more than $1.1 billion.

Seven’s share price was 1.6 per cent this morning to $20.81.

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