Boral urges shareholders to reject $8b bid from Stokes-led Seven

Australia’s largest listed supplier of building products Boral has urged its investors to reject the offer from billionaire Kerry Stokes’ industrial conglomerate Seven Group Holdings that values the company at $8 billion.

Boral said its committee of directors believed the $6.50 offer was “opportunistic” and delivered a “nil” premium to its last close. Boral director and Seven managing director Ryan Stokes has stepped off the Boral board while it considers the proposal.

Seven Group already holds a 23.18 per cent stake in Boral.Credit:Louie Douvis

“The committee believes the offer is opportunistic, undervalues the company and unanimously recommends shareholders reject the offer once it opens by taking no action,” the company said in a statement.

“Boral management remains committed to the company’s strategic goals including the transformation targets set across the group and the ongoing process in relation to its North American portfolio.”

Seven already holds a 23.18 per cent stake in Boral. It also owns a controlling stake in Seven West Media and owns equipment hire businesses Coates Hire and WesTrac.

Seven launched the offer on Monday evening, explaining that while it had launched a full takeover offer, it would be satisfied if it was able to build its holding to 30 per cent. Under Australian takeover laws, Seven has to launch a full takeover offer given the size of its stake in Boral already.

Seven managing director Ryan Stokes has stepped off the Boral board while it considers the proposal.Credit:James Alcock

Boral has been hard hit by troubles within its US business and is looking to sell assets in North America to focus its attentions on its Australian business which is being buoyed by stronger-than-expected recovery in the housing market post-COVID-19.

Seven’s offer is also conditional on there being no material adverse change to Boral or the overall market and Seven receiving consent from the majority of its lenders under its corporate loan facility. The offer is expected to open for Boral shareholders on May 25.

Seven is flush with cash after recently raising $500 million from shareholders.

Seven said on Monday that its offer was a premium to price being currently offered by Seven to buy back investor shares.

Boral shares were up 1.5 per cent to $6.59 at 11.34am AEST.

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