Australia's Boral backs Seven Group's improved $980 mln offer

Boral Limited, an Australian building and construction materials company, announced on April 11, 2023, that it recommended shareholders accept an improved takeover offer from its largest shareholder, Seven Group Holdings. The initial offer, valued at around A$980 million ($722 million), was increased following negotiations between the two companies.

Seven Group Holdings, which is controlled by billionaire Kerry Stokes and his family, had previously held a 22% stake in Boral. With this latest offer, they aim to increase their control over the company by acquiring the remaining shares they do not already own.

The improved offer includes a cash component of A$4.40 per share, which is a 23% premium over the last closing price before the initial takeover bid was announced. The original proposal consisted of a cash component of A$3.75 per share and a 14.9% stake in Boral.

Boral's board of directors unanimously agreed that the revised offer is in the best interest of the company and its shareholders, given the certainty of value and the premium being offered. The acceptance of the offer is subject to customary conditions, including regulatory approvals and the approval of at least 75% of Boral shareholders.

The proposed acquisition comes as Boral has been dealing with various challenges, including a decline in demand for building materials due to the COVID-19 pandemic and the impact of extreme weather events on its operations. The company has also been undergoing a strategic review to address these challenges and improve its financial performance.

Seven Group Holdings, on the other hand, has been actively seeking growth opportunities in the resources and infrastructure sectors, and the acquisition of Boral would provide it with a significant presence in the building materials industry.

The transaction is expected to be completed by the end of 2023, subject to the satisfaction of the conditions precedent. The acquisition is expected to create synergies and cost savings for Seven Group Holdings, which could potentially lead to increased value for its shareholders.

In summary, Boral Limited has recommended its shareholders accept an improved takeover offer from Seven Group Holdings, valued at around A$1.5 billion, following negotiations between the two companies. The offer represents a 23% premium over the last closing price and is expected to provide certainty of value for Boral shareholders. The acquisition is subject to regulatory approvals and the approval of at least 75% of Boral shareholders. The deal comes as Boral has been dealing with various challenges and undergoing a strategic review, while Seven Group Holdings seeks growth opportunities in the building materials industry.