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

Boral Limited, an Australian building materials supplier, announced on April 11, 2024, that it recommends shareholders accept an improved takeover offer from its largest shareholder, Seven Group Holdings. The initial offer, valued at A$980 million, was increased following negotiations between the two companies, with the cash component of the deal being boosted.

Seven Group Holdings, which currently owns approximately 22% of Boral, first proposed a takeover bid for the company in February 2024, offering A$4.40 per share in cash. However, the initial proposal was rejected by Boral's board, which believed the price undervalued the company.

Following the rejection, Seven Group Holdings revised its offer, increasing the cash component from A$4.40 per share to A$4.70 per share, bringing the total value of the deal to around A$1.5 billion. This new offer represents a 23% premium to Boral's last closing price before the initial bid was announced.

Boral's board, after careful consideration, determined that the revised offer is in the best interests of the company and its shareholders, and therefore, recommended that they accept the offer. The board also intends to vote in favor of the transaction at the upcoming Boral meeting, which is expected to be held in May 2024.

The proposed acquisition is subject to various conditions, including approval from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC), as well as a majority of Boral shareholders accepting the offer. If these conditions are met, the transaction is expected to be completed by the end of 2024.

Boral is a leading building and construction materials supplier in Australia, with operations in various sectors, including concrete, clay bricks, roofing, and fly ash. The company employs around 12,000 people and reported revenue of A$6.3 billion in the 2022-23 financial year.

Seven Group Holdings, which is controlled by billionaire Kerry Stokes, is a diversified media, technology, and property company with significant interests in the media sector, including the Seven Network, the West Australian newspaper, and Pacific Magazines. The company also has investments in various industries, including resources, energy, and infrastructure.

The acquisition of Boral would significantly expand Seven Group Holdings' presence in the building and construction materials sector, providing the company with a larger and more diversified portfolio of assets and revenue streams.

In summary, Boral Limited has recommended that its shareholders accept an improved A$1.5 billion takeover offer from its largest shareholder, Seven Group Holdings, following negotiations between the two companies. The deal, which represents a 23% premium to Boral's last closing price, is subject to various conditions and is expected to be completed by the end of 2024, if approved by the necessary regulatory bodies and a majority of Boral shareholders.