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Seven Group Holdings (ASX: SGH) has seized on Boral’s (ASX: BLD) latest profit performance with plans to take full control of the building products giant and delist it from the stock exchange.
Seven Group, the listed investment vehicle of Western Australian media barons the Stokes family, already owns 71.6 per cent of Boral after first taking an interest in the company in 2020.
Seven Group is willing to pay up to $6.25 per Boral share in the cash-and-scrip offer, which could represent an implied value of $6.89 billion depending on changes to the SGH price.
However, Boral has immediately advised that shareholders take no action in relation to the bid until a committee of independent directors makes its recommendation.
Seven is sweetening the base price being offered for Boral, dependent on the company achieving certain levels of ownership.
The minimum consideration of 0.1116 Seven Group shares and $1.50 cash per Boral shares values the offer at $6.05 per share.
Seven plans to up the cash offer by 10c per share if it reaches an aggregate interest of at least 80 per cent of Boral or if the Boral board unanimously recommends the offer.
The company is offering another 10c per share if it reaches the 90.6 per cent compulsory acquisition threshold, which would take the offer to $6.25 per share.
“Today’s announcement represents an exciting opportunity to integrate Boral into SGH’s leading Industrial Services portfolio,” says Seven Group Holdings CEO Ryan Stokes.
“The transaction has a compelling rationale for SGH, and for Boral’s shareholders, who would become SGH shareholders as part of the transaction and continue to benefit from the operational improvement journey underway at Boral.
“The terms of the offer reflect our disciplined approach to capital allocation, and we will retain a strong balance sheet position post-transaction.”
Stokes describes Boral becoming a fully owned subsidiary as ‘a natural evolution for SGH, supporting our position as a leading ASX industrial business’.
“The integration is expected to support and accelerate the delivery of the current ‘Good to Great’ performance journey,” he says.
Among the companies currently in the Seven Group Holdings portfolio are equipment hire business Coates and Cat equipment dealer WesTrac. Seven also has a 30 per cent stake in Beach Energy (ASX: BPT) and a 40 per cent interest in Seven West Media (ASX: SWM), among other interests.
Seven Group says the maximum offer of $6.25 per Boral share will not be increased.
The company says a full takeover represents a ‘more efficient holding of Boral via a de-listed structure, creating greater control and direct access to cashflows’.
The move will also cut Boral’s compliance and listing costs by about $3 million a year.
Boral has been riding high on the construction booming construction sector in recent years with the company delivering a 51 per cent increase in underlying EBITDA in the December half to $314 million.
Revenue for the period was up 9.4 per cent to $1.84 billion amid rising prices across the board, and rising volumes among some of its products.
Seven Group says through the acquisition Boral shareholders will ‘continue to participate in Boral’s ongoing performance journey through a shareholding in SGH, while gaining exposure to a broader portfolio of high-quality businesses’.
Boral’s shares were trading 3 per cent higher at $6.03 at 10.41am (AEDT). Seven Group Holdings’ shares were down 1.7 per cent at $40.09.
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