The CSR Ltd (ASX: CSR) share price jumped 17% yesterday on news of a possible takeover bid.
CSR is one of the largest building product businesses in Australia. It makes various products including bricks and Gyprock.
Takeover bid for CSR
This morning, the company responded to media speculation about there being a possible deal in the works to buy CSR.
CSR confirmed it has received a conditional, non-binding, indicative offer from Saint-Gobain to acquire 100% of the shares in a takeover for a CSR share price of $9.
Under the proposal, CSR would be entitled to pay a final dividend of up to $0.25 per share for the 12 months to 31 March 2024, which would be deducted from the cash offer price.
What are the conditions?
CSR said the proposal comes with a number of conditions.
It requires completion of satisfactory due diligence, entry into a takeover agreement on customary terms and conditions, the unanimous recommendation from the CSR board to vote in favour of the proposed transaction, required regulatory approvals and CSR shareholder approval.
CSR board reaction
This offer follows an earlier offer and a period of negotiation. After looking at the proposal, the CSR board unanimously decided to pursue the takeover. CSR said it’s currently providing Saint-Gobain with confirmatory due diligence access to progress to a binding deal at an agreed price of $9.
When the players in a possible takeover are talking to each other for a while, and going through the steps, it suggests there may be a good chance the takeover will go ahead.
However, the CSR board noted there is no certainty that the proposal will result in a binding offer. The board will continue to keep the market “informed as appropriate and in accordance with its continuous disclosure obligations.”
CSR said shareholders don’t need to take any action.
Final thoughts on the CSR share price
At the pre-open price, shareholders could still see a rise of another 13% to the offer price, so I’d wait for a price that’s much closer to that before deciding to sell early. The offer was just over 30% more than where the CSR share price was at the time.
It’ll be a shame to lose CSR from the ASX, but it’s a good time to be a shareholder.
