Boral Rejects Seven Group Holdings Takeover Offer
- Boral Rejects the takeover, believing it undervalues the company.
- Seven Group yesterday announced a full takeover Bid at $6.50 per share.
- Boral shares today opening trading 2 per cent higher.
Seven Group Holdings (ASX: SVW) yesterday announced to the ASX a takeover offer for all of Boral's (ASX: BLD) shares at a price of $6.50 per share. This morning, 11 May 2021, Boral rejected the offer, with the company's board recommending shareholders that they reject the $6.50 offer. The Australian building materials supplier made it clear how the offer to purchase its shares was a "nil premium to the last close," recommending its shareholders to respond by "TAKING NO ACTION.
Seven Group Holdings is a heavily diversified Australian industrials company with operations across Industrials Services, Oil and Gas. The company own notable brands such as Coats Hire, AllightSkyse and has approximately a 23.18 per cent stake in Boral. Currently, they are restricted from acquainting further positions in Boral but citing in their ASX announce their general satisfaction with increasing their stake to 30 per cent.
The Group's current offer at $6.50 per share did not represent a premium to the last trading price. It was, however, a 22 per cent premium to the volume-weighted moving average price (VWAP). Kerry Stokes, Executive Chairman of Seven Group, also believe that the offer is unlikely to be beaten by any other party due to their already extensive holding.
Before the market opened on the 11th of May 2021, Boral's rejection of the takeover offer was based on the belief that the offer was "opportunistic and undervalued the company." Today, Boral shares opening 2 per cent higher at $6.63 per share, 13 cents beyond the proposed offer price. Share in the company has surged an incredible 34 per cent year to date. Since their COVID-19 lows, the company's share price has surged 290 per cent, approaching four-year highs.
The materials, infrastructure and commodities sector has recently experienced significant strength as the global economy continues its rapid recovery. Governments internationally have begun the transition to physical infrastructure spending to stimulate economic activity, named US president Joe Biden. A $1.8 Trillion American jobs plan looks to reignite the US economy with an intense focus on infrastructure spending, an area from which Boral's North American Division would benefit significantly from.
Seven Group Holding shares have fallen to the wayside, trading 1.6 per cent lower after the first hour of trading today at $20.81 per share. The company is trading just below their pre-pandemic highs and 14 per cent below all-time highs established in March 2021. Following the offer, Ord Minnett has issued an Accumulate rating on Seven Group Holdings with 25.71 per cent upside, citing the belief it is likely they may increase their holding to at least 30 per cent of Boral.