Seven Group Holdings’ hostile takeover of Boral is moving closer to success, after increasing its offer price and lifting its holding to 35 per cent.
Seven Group Holdings’ hostile takeover of Boral is moving closer to success, after increasing its offer price and lifting its holding to 35 per cent.
The Kerry Stokes-chaired Seven Group has increased its offer price to $7.40 per share.
That’s the second increase, following the original bid at $6.50 per share and a subsequent increase to $7.30.
The latest increase was triggered by Seven Group reaching a 34.5 per cent holding yesterday.
In a substantial holder notice lodged today, Boral said Seven Group’s holding had increased to 35 per cent as a result of Boral’s share buyback reducing the total amount of stock in the market.
Boral’s independent directors have continued to recommend that shareholders reject the offer, saying it undervalues the building material giant.
They said it represented a small premium to Boral’s prevailing share price before the takeover offer and fell short of the valuation put on Boral’s stock by an independent expert’s report.
That report said Boral shares were worth between $8.25 and $9.13.
Despite this advice, Seven Group has lifted its holding from 23 per cent before the takeover offer was announced.
Seven’s takeover has taken advantage of Boral’s weak performance in recent years including major problems with its US business.
Boral recently sold its US business and outlined a raft of changes to improve the performance of its Australian operations, but it appears many shareholders have lost patience with the incumbent board.
Seven Group, which is being advised by Barrenjoey Capital Partners, is likely to adopt a patient, long-term approach to the takeover.
It already has one director on the eight-person Boral board - chief executive Ryan Stokes - and has signalled it will seek further representation that is proportionate with its holding.
Boral chair Kathryn Fagg agreed last year to appoint two Seven Group representatives to the board but changed her mind after being criticised by other shareholders.
Seven Group is also likely to take advantage of the ‘creep’ provisions that allow shareholders with more than 19.9 per cent to gradually increase their holding without having to launch a full takeover offer.
Mr Stokes used similar tactics when he gained control of West Australian Newspapers (now Seven West Media) and Beach Energy.
The Boral holding adds to Seven Group’s diverse collection of assets.
They include Caterpillar dealership Westrac and Coates Hire, along with its holdings in Seven West Media and Beach Energy.
