Boral Limited has announced changes to its Board of Directors after Seven Group Holdings closed its Offer to buy more Boral shares, securing a 69.6 per cent holding in the construction materials giant.
The Boral share price on 29 July closed at $7.34, slightly down on the final cash per share Offer of $7.40 that Seven Group Holdings (SGH) paid. After first mounting the Offer on 10 May, SGH gradually increased the Offer price from $6.50 as each of its conditions were met. The off-market takeover offer closed at $7.40 and was not extended beyond 7:00pm on 29 July.
As part of changes to the Boral Board’s composition announced by Boral on 30 July, SGH’s managing director and chief executive officer Ryan Stokes has, with immediate effect, been appointed as the chairman of the Board of Directors.
Stokes was SGH’s sole representative on the Boral Board prior to the off-market takeover offer and recused himself from the Boral Board once the Offer was mounted.
Former Boral chairman Kathryn Fagg has retired from the Board with immediate effect.
Stokes paid tribute to his predecessor, thanking Fagg for her contribution. “She has served Boral shareholders over multiple terms, overseeing significant changes and challenges in that time,” he said.
“Kathryn leaves Boral in a strong position, with an actionable transformation strategy and a well-progressed program of strategic divestments for its US businesses, including continuing to assess options for the fly ash business. The Board is very grateful for her service.”
Stokes also welcomed the appointment of SGH’s chief financial officer Richard Richards as a Board director. “I am also delighted to announce the immediate appointment of Richard Richards to the Boral Board,” he said. “I look forward to working with the Board and Management Team to realise the potential through transformation and strong operating disciplines to deliver sustainable returns for Boral shareholders.”
Two other Board directors – Peter Alexander and Deborah O’Toole – will step down from the Board after Boral’s next Annual General Meeting in October 2021.
Throughout the off-market takeover offer process, SGH insisted it would retain a majority of the independent directors on the Boral Board and continue to support the Board’s “current publically disclosed strategy” and “collectively drive Boral’s renewed strategy and maximise value for all shareholders”.
In announcing changes to its Board, Boral has confirmed that the Board will retain a majority of independent directors and the governance framework will continue to be consistent with “promoting the best interests of all shareholders”.
Boral also announced the establishment of a standing Independent Directors’ Committee. This will be chaired by a Lead Independent Director who will be appointed in due course.
Divestments and transformations
The shake-up to Boral’s Board structure is unlikely to impact Boral CEO Zlatko Todorcevski who commenced his role on 1 July, 2020. In the past 13 months, Todorcevski has been instrumental in a number of sales and divestments as Boral has sought to return to profitability after a number of disappointing international ventures and a decline in domestic performance.
In that time, Todorcevski has offloaded Boral’s stake in the former USG Boral plasterboard joint venture to Knauf for $1.4 billion and has sold Boral North America’s building construction business to Westlake for $2.9 billion.
At the end of July, Todorcevski announced that Boral’s Australian timber business would be sold to the Pentarch Group for $64.5 million, subject to customary completion adjustments.
Todorcevski also oversaw the recent buyback of $860 million of 122 million shares in late April at an average price of $7.01 per share. The buyback ironically assisted SGH with gradually increasing its stake in Boral while the Offer was under way.
The next major sale on Todorcevski’s list is Boral’s US fly ash business, which is estimated to be worth up to $USD1 billion. It is attracting the interest of various suitors, according to a Bloomberg report. They include construction materials multinationals Holcim, HeidelbergCement and Waste Management.
As reported by The Australian Financial Review, Todorcevski has projected “transformation” benefits of $200 million to $250 million in Boral’s Australian operations over the next five years.