The BlueScope Steel (ASX: BSL) share price sank over 2% after the company released a fiery response to SGH and Steel Dynamics takeover offer bid.
BlueScope is a steel manufacturer and global leader in metal coating and painting products, with Colorbond being one of its most well-known brands. It has operations in the USA and the Asia Pacific region including Australia.
Decisive response to takeover offer
A non-binding indicative offer was made on Tuesday to acquire the whole of BlueScope Steel. This offer came from a consortium made up of ASX share SGH Ltd (ASX: SGH) and NASDAQ-listed company Steel Dynamics.
BlueScope responded after market close on Wednesday, announcing that it “rejects highly opportunistic takeover proposal”. The board decided to unanimously reject the unsolicited, non-binding, indicative and conditional takeover proposal.
BlueScope Chair Jane McAloon said:
Let me be clear – this proposal was an attempt to take BlueScope from its shareholders on the cheap. It drastically undervalued our world-class assets, our growth momentum, and our future – and the Board will not let that happen. This is the fourth time we’ve said no, and the answer remained the same – BlueScope is worth considerably more than what was on the table.
Steel Dynamics has been very persistent, with this being the fourth offer it has been involved in since late 2024 to acquire BlueScope’s North American business.
In the rejection announcement, BlueScope continued to affirm its position by outlining that the proposal failed to adequately recognise the value of BlueScope’s assets and comes at a time of lower steel spreads in Asia.
The company said that if steel spreads and foreign exchange rates reverted to historical average levels, this would be expected to generate an additional $400 million to $900 million of EBIT (EBIT explained) per annum relative to FY25.
In a final blow, BlueScope said that “the takeover proposal also fails to appropriately value the significant synergies and other benefits available to the consortium. Further, given the consortium are seeking to debt-fund the takeover, and BlueScope had virtually no net debt at FY2025, the bidders are seeking to use BlueScope’s balance sheet to help fund their opportunistic takeover proposal.”
Final thoughts on the BlueScope share price
Ouch. It remains to be seen if this strong response is enough to stop the onslaught of takeover offers, or perhaps inspire an offer that BlueScope management would accept.
The rejection doesn’t come at a surprise, given that the BlueScope board had previously indicated that it wasn’t impressed. It is however one of the strongest rejections to a takeover offer I’ve seen.
The BlueScope share price was down over 2% earlier today, it has somewhat recovered and is down around 1% at the time of writing. If we zoom out a little further though, it is still up a huge 20% from Monday’s share price.
I’m interested to see if SGH and Steel Dynamics come back with a larger offer, or if Steel Dynamics will walk away now after this fourth attempt.
If I were a BlueScope shareholder I’d be happy with a 20% share price jump this week. However, I wouldn’t be looking to add it to my portfolio at this price. I’m happy to sit back and watch this unfold whilst I look at investing in other ASX growth shares.
