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‘Neither fair nor reasonable’: Boral recommends rejection of SGH takeover bid

Boral has recommended that shareholders reject Seven Group Holdings’ takeover offer after an independent assessment found it “neither fair nor reasonable” and undervalues the construction material provider. 

Last month, SGH launched a billion-dollar bid for the remaining Boral shares which it doesn’t own in its majority stake of 71.6 per cent. Boral, through independent assessor Grant Samuel, believes the SGH offer is lower than the “fair market value” of $6.50 – $7.13 per share, estimated by Samuel.  

“We have carefully evaluated the SGH offer and recommend that shareholders should reject the SGH offer as it undervalues Boral,” a Boral spokesperson said.  

“The independent expert has concluded that the SGH Offer is neither fair nor reasonable, supporting the BRC’s view.”  

As a result of the findings, Boral’s bid response committee (BRC) had recommended shareholders reject the SGH offer as “it does not represent appropriate value for minority shareholders”. According to the company’s statement, each Boral director on the BRC who holds Boral shares is set to reject the offer.  

It comes as the assessor Grant Samuel also revised the assessment of Boral’s surplus property assets. The previous stated amount was over $1 billion but Grant Samuel assessed the value as $1.4-$1.6 billion. According to the company’s target statement, this gives the company belief it can “realise latent value from its surplus property portfolio” and provide value for shareholders.  

However, Samuel did note in his findings that “judgment in relation to reasonableness is finely balanced” so there was a case for shareholders to accept the offer if they had a low tolerance for risk. 

BRC chairperson Robert Stindel said the company had a strong outlook for the future on its current trajectory. 

“Our core focus is to continue to deliver value to all Boral Shareholders, including the minority shareholders, and we want all Boral Shareholders to benefit from the future value we believe is available through Boral,” BRC chairperson Robert Sindel told shareholders. 

“Boral’s outlook is robust and supported by positive market fundamentals. 

“Boral management is ahead of schedule in delivering on its ‘Good to Great’ improvement strategy and is only part way through this journey.” 

SGH chief executive Ryan Stokes has reportedly disagreed with the BRC’s recommendation. Last month, SGH lodged the offer as its “best and final” offer.  

“While we respect the work that the bid response committee has put into arriving at this recommendation, we obviously disagree with their assessment strongly,” Stokes told AFR.  

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