The Boral Ltd (ASX: BLD) share price is up 3% after Seven Group Holdings Ltd (ASX: SVW) launched a takeover bid.
Boral is a large ASX-listed construction business, while Seven Group has a large construction segment and also is a large shareholder of Seven West Media Ltd (ASX: SWM).
Takeover bid
Seven Group already owns 71.6% of Boral and is proposing to buy the rest.
This offer is a minimum of 0.1116 Seven Group shares and $1.50 cash per Boral share, which Seven said was an aggregate value of $6.05 at the time of the announcement. That’s how much it’s initially valuing the Boral share price.
The offer will be increased by $0.10 per share in cash if Seven Group reaches at least 80% of the business and/or the Boral board unanimously recommends the offer.
Seven would increase the offer by another $0.10 per share in cash if it reaches the 90.6% compulsory acquisition threshold.
Therefore, the maximum offer at the time of the offer was $6.25. Seven Group said it would not acquire Boral shares for more than $6.25 for at least 12 months after the close of the offer.
Seven is attracted to this deal because it thinks it can add greater value at higher levels of ownership, while providing greater influence and ability to optimise cashflows, as well as removing $3 million per year of listing and corporate costs.
Initial Boral response
Boral advised shareholders to take no action in relation to this offer or any other correspondence received from Seven Group until Boral’s board sends further information.
A board committee of Boral’s independent directors has been established in order for Boral to respond to the offer, which is currently being considered.
Once the offer opens on 4 March 2024, Boral will prepare a ‘target’s statement’ responding to the offer, which will include directors’ recommendation about the offer, and an independent expert’s report and opinion on whether the offer is ‘fair and reasonable’ for Boral shareholders.
The target statement is expected to be dispatched around mid-March 2024. Boral said shareholders should read this before making a decision about the offer.
Boral has appointed UBS as financial adviser and Allens as legal adviser to help.
It will interesting to see how this develops, I’m not sure whether Boral shareholders will want to accept or not considering the business was already on a good path. The takeover bid premium for the Boral share price wasn’t much at all.
