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Boral recommends ‘no action’ for shareholders after Seven’s billion-dollar bid

Boral has recommended shareholders “take no action” after Seven Group Holdings (SGH) billion-dollar bid for the major aggregate and construction materials producer.  

SGH, who already owns 71.6 per cent of Boral, made an off-market bid for the remaining 28.4 per cent stakes in the aggregate producer. The minimum consideration offered was 0.1116 SGH shares and $1.50 cash per Boral Share (aggregate value $6.05) with a maximum consideration of $6.25.  

The consideration, according to reports, values the remaining stakes at around $1.9 billion. SGH stated the considerations is its “best and final” offer which will not be increased. 

“By acquiring the Boral shares it does not already own, SGH intends to drive an acceleration of Boral’s performance journey and long-term growth,” SGH’s public announcement said. 

“The integration of Boral into SGH is consistent with the Group’s owner-operator strategy and would increase SGH’s strategic flexibility and access to Boral’s cash flow.” 

In its public notice to Boral shareholders, SGH put forward that it was offering the rates at a “premium”. 

“We believe the offer is compelling to Boral shareholders as we are offering shareholders a premium to last close, notwithstanding control has already passed to SGH,” the notice read. 

“The minimum consideration is 27 per cent higher than SGH’s previous 2021 offer (from which control of Boral passed to SGH) and is higher than any closing price at which Boral has traded since 2007. 

“We are pleased to offer the ability for Boral shareholders to become SGH shareholders so that we can continue, in a more streamlined and efficient manner, to generate shareholder value.  

“We believe that bringing together Boral and SGH provides a number of significant benefits to Boral shareholders.”  

Boral has set up a committee of independent directors to assess the offer after it recommended shareholders take no action following the announcement.  

“Once the offer opens, Boral will prepare a Target’s Statement responding to the offer, which will include the directors’ recommendation in relation to the offer and an Independent Expert’s Report opining on whether the offer is fair and reasonable to Boral shareholders,” Boral’s statement read. 

CHANGING LANDSCAPE  

CRH
CRH has a presence in Europe and North America, including their Drahle sand quarry in Poland. Image: CRH

SGH’s bid for Boral could be one of the more significant shake-ups to the Australian aggregate sector in recent years.  

SGH has a diverse portfolio, including Westrac, Coates Hire, Beach Energy and a controlling interest in Seven West Media alongside its stake in Boral.  

It employs more than 15,500 people across five core industries spanning industrial services, energy and media.  

Some reports, citing analysts at Evans and Partners, noted SGH’s move with some interest.  

“We suspect the move reflects management’s view that the upside to Boral’s earnings is much more than the market has assumed,” the analysts said. 

However, SGH noted in its investor presentation that it wants to ensure “Boral is prepared” with CRH looking to enter the market. 

CRH is a major aggregate and construction materials provider throughout Europe and North America. In more recent times, it announced its plans to acquire AdBri, the well-known Australian construction materials provider.  

The potential $2.1 billion-dollar deal was announced last year, with CRH and Barro partnering up to make the deal possible. Barro, an Australian-owned business, has a current 43 per cent stake in AdBri, with CRH looking to take over the remaining 57 per cent.  

Adbri’s independent board committee recommended entering into a period of exclusivity with CRH and Barro over the potential transaction.  

“We have held a long-term interest in the Australian construction materials market, which has attractive attributes including stable market dynamics and positive growth prospects, similar in nature to the Southern United States and Central and Eastern Europe where we have a significant presence,” CRH Albert Manifold said in a statement at the time.  

“Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates. With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us. 

“This acquisition would strongly complement our existing Australian business, creating additional opportunities for growth and development.” 

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