Boral backs in revised SGH takeover offer

Boral’s board has backed major shareholder Seven Group Holdings’ sweetened takeover offer after the Stokes family-controlled bidder upped the value.

After receiving a tweaked takeover offer, cement maker Boral is unanimously recommending its shareholders accept SGH's takeover offer, after previously backing in its decision to reject the bid first lobbed in February. 

The cash component of $1.50 per share has been bumped to the maximum consideration of $1.70 per share. Under the initial offer, the two 10 cent increases were conditional on reaching certain acceptance levels.  

Boral will pay a fully franked dividend of 26 cents cash per Boral share. SGH will pay a special 30 cents per SGH share, equivalent to 3.3 cents cash per Boral share.

The target will also have an option to undertake an on-market buyback at a maximum price of $6.42 per Boral share.

The value for Boral shareholders is now between $6.16 - $6.39 per Boral share plus about 13 cents per share in franking credits for Boral shareholders who are able to obtain the benefit of the franking credits.

Boral’s independent expert Grant Samuel & Associates has now deemed the improved offer reasonable, after previously labelling the offer neither fair nor reasonable.

Following scrutiny from SGH over the independent expert’s analysis, Boral backed in its rejection recommendation, although the estimated value range got a trim.

Since first lobbing the $1.8 billon takeover offer in February, SGH has grown its stake in the target to a 78.8 per cent shareholding from 71.6 per cent. 

Additionally, SGH has flagged proposed governance changes including appointing an additional two executives to Boral's board, giving Seven effective control of decision making. 

In its updated target’s statement, Boral said given the risks of remaining a minority shareholder and revised expert’s opinion, shareholders should accept the offer.

“SGH’s interest in Boral has now increased to 78.8 per cent and, with the likelihood that this will increase further before the end of the offer period, there is a risk for minority shareholders that liquidity in trading of Boral shares will reduce, perhaps materially, which may adversely affect their ability to dispose of their Boral shares in the future,” Boral said.

SGH managing director Ryan Stokes said they welcomed the change in recommendation from the bid response committee.

He said they were pleased to be able to offer Boral shareholders the maximum consideration under its offer.

“Both new and existing SGH shareholder also stand to benefit from the 30 cent per share fully franked dividend that SGH will pay following completion of SGH’s offer,” Mr Stokes said.

“The initiatives announced today improve momentum supporting our achievements of this outcome.

“Boral shareholders will continue to have exposure to the future of the Boral’s business within SGH, alongside the group’s suit of market-leading, industrial-focused businesses.”

The offer period has been extended to May 15.