ASX-listed Boral hits back in $2 billion takeover battle with Seven Group

Matt Mckenzie
The Nightly
2 Min Read
Grant Samuel stood by its valuation of Boral on Thursday with one revision. Credit: Boral
Grant Samuel stood by its valuation of Boral on Thursday with one revision. Credit: Boral Credit: Boral

Boral is sticking to its guns in the final days of Seven Group’s $2 billion takeover play but has admitted independent expert Grant Samuel overvalued the company’s shares by 8 cents.

Seven had been chasing the 28 per cent of the Sydney-based manufacturer not already under its control. But Boral’s independent board members knocked back the deal saying it was “not fair and reasonable”.

That set off a skirmish about Boral’s value. The company drew heavy fire from Seven, which argued the target’s response had been “unbalanced, selective and (risked) fundamentally misleading Boral minority shareholders”.

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Grant Samuel’s March report reckoned Seven’s cash and scrip bid valued Boral at between $5.96 and $6.39 per share.

The advisers argued the ASX-listed business should be worth $6.50 to $7.13, with a turnaround strategy underway and options to unlock value from land holdings.

On Thursday Grant Samuel stood by its numbers but made one revision, tied to the potential Northern Lands development at Boral’s Deer Park quarry.

“Boral has advised Grant Samuel that if the . . . development proceeds, it is likely that Boral will need to incur incremental capital expenditure on quarry development above the level which would be covered by Boral’s regular ongoing quarry replacement program.”

That extra capex — which would help unlock about 450 hectares in Melbourne’s west — would cost 8 cents per share.

Boral’s independent board committee called on investors to hold tight and take no action as the clock runs down on the bid.

The takeover would put Boral more firmly into the Seven business empire led by chief executive Ryan Stokes and including Coates, Westrac, and Seven West Media — publisher of The West Australian.

Mr Stokes has said the deal would give Boral shareholders exposure to growth assets including the company’s other industrial businesses.

“We will continue to take this offer forward to shareholders directly, and make sure that retail shareholders — who represent half the free float— understand that non-acceptance runs the risk of stranding them in an illiquid position with no dividends,” he has said.

Boral shares have surged 64 per cent in the past year amid a turnaround strategy under chief executive Vik Bansal.

In the six months to December, the company delivered a $122 million profit. That was up about 36 per cent on the prior year and came as revenue rose 9 per cent to $1.8b.

Those half-yearly results also saw the company deliver a double-digit growth in earnings margin for the first time in many years.

Seven Group’s latest filing shows the company now controls 74.6 per cent of Boral.

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