Australia’s Boral has recommended that investors reject Seven Group Holdings’ bid to acquire full control of the building products group, claiming that the offer undervalues the company. Seven Group, which is controlled by billionaire Kerry Stokes and his family, already owns nearly 72% of Boral and had launched a A$1.9 billion bid to acquire the remaining shares. The proposed offer of a minimum A$6.05 per Boral share consists of 0.1116 Seven Group shares and A$1.50 in cash.
Grant Samuel, an independent expert firm, assessed the fair value of Boral to be in the range of A$6.50-A$7.13 per share, significantly higher than Seven Group’s offer. Seven Group’s bid values Boral at A$6.67 billion ($4.35 billion) and represents a 3.4% premium to its last closing level before the bid was made. However, Boral’s directors, other than Seven Group nominees, have indicated their intention to reject the offer, citing the recommendation from Grant Samuel that the bid is “not fair and not reasonable.”
In a statement, Seven Group Chief Executive Ryan Stokes expressed his disagreement with Boral’s rejection of the offer, stating that they strongly disagree with the assessment made by the bid response committee. The offer was declared as the best and final, meaning that Seven Group cannot increase it further. Boral also highlighted that only a small percentage of its total issued shares had accepted the Seven offer since it opened on March 4, indicating a lack of shareholder support for the bid.
Future Developments
Despite Seven Group’s efforts to acquire full control of Boral, the rejection by the company’s directors and the assessment from Grant Samuel suggest that the offer falls short of the company’s true value. The bid’s failure to gain traction among shareholders further underscores the reservations that investors have about the proposed deal. It remains to be seen whether Seven Group will pursue other avenues to increase its stake in Boral or if the company will explore alternative options to unlock shareholder value.