Seven Group Holdings has called out ‘fundamental errors’ in the independent expert report, which was part of the basis for Boral’s rejection of its takeover.
The claims came as the SGH released an updated bidder’s statement in response to Boral’s rejection on March 19.
“SGH is extremely disappointed that there were fundamental errors in the Independent Expert Report in Boral’s target’s statement,” SGH wrote in its bidder’s statement.
“(It) directly affected the valuation range and the Independent Expert’s conclusion.
“As a consequence, the Target Statement is unbalanced, selective and risks fundamentally misleading Boral minority shareholders.”
SGH claimed the assessment had ‘inappropriately’ given value to a carbon border adjustment mechanism and failed to consider ‘critical costs of capital inputs’ and relevant scenarios and valuations as well as the plus capital gains tax impact on the surplus properties.
SGH already owns 72 per cent of Boral and was planning to take the remaining shares. Its proposal included a minimum of $6.05 per Boral share consists of 0.1116 Seven Group shares and $1.50 cash. The offer was structured so the minor shareholders received more if they accepted the offer quickly.
SGH believes the assessor should have found the offer ‘reasonable’, and Boral’s bid response committee should have recommended the offer to shareholders.
“SGH considers that Grant Samuel should revise its Independent Expert’s Report to correct these fundamental errors,” they wrote in the bidder’s statement.
“Boral’s Bid Response Committee should amend its recommendation to Boral Shareholders as a result.”
It comes after Boral bid committee urged shareholders to reject the SGH’s takeover bid of the Australian construction materials provided on March 19. The basis of the rejection was Grant Samuel’s findings that the deal was ‘not fair nor reasonable’ and undervalued according to its estimates.
Grant Samuel concluded the deal was not reasonable but that the ‘judgement was finely balanced’. The assessor judged a fair offer for the remaining Boral shares was A$6.50-A$7.13 per share.
“Boral’s outlook is robust and supported by positive market fundamentals; Boral is making meaningful progress on its strategy and is expected to continue to deliver value for Boral Shareholders through its strong earnings growth and free cash flow generation,” the Boral report read.
The report also said there was an “opportunity for Boral to realise latent value from its surplus property portfolio, which may then be reflected in Boral’s share price in the future.
“The Independent Expert has attributed a value of $1.4 to $1.6 billion ($1.26 to $1.44 a share) to the property.”
SGH reiterated that the offer was its ‘best and final’, and they believed a competing bid was ‘highly unlikely’.
