BlueScope Steel rejects ‘cheap’ $13 billion takeover offer by SGH and Steel Dynamics

BlueScope Steel has rejected a joint $13 billion takeover offer by the Stokes family’s SGH and US group Steel Dynamics, saying Australia’s biggest steelmaker is worth “considerably more”.

In an unusually strongly worded rejection that suggests the suitors will have to substantially increase their offer to attract the backing of the target’s board, BlueScope said late on Wednesday that their indicative $30-a-share cash offer “significantly undervalued” the company.

“Let me be clear, this proposal was an attempt to take BlueScope from its shareholders on the cheap,” chair Jane McAloon told investors.

“It drastically undervalued our world-class assets, our growth momentum, and our future – and the board will not let that happen,” Ms McAloon said.

Steel Dynamics had previously tried three times unsuccessfully to interest BlueScope in a buyout since 2024 with the aim of carving out the Australian group’s North Star steel business in North America.

Ms McAloon’s comments on Tuesday suggested a degree of frustration that the US steelmaker had returned, this time in partnership with the Stokes-controlled SGH conglomerate, which owns the WesTrac heavy equipment business, the Boral building products group and the Coates industrial hire business.

“This is the fourth time we’ve said no, and the answer remained the same – BlueScope is worth considerably more than what was on the table,” she said.

Steel Dynamics’ last approach in early 2025 valued North Star at $24 a share and the rest of BlueScope at a minimum $9 a share, for a total of $33.

That’s provided a reference point for the BlueScope board, which believes the company can deliver more value through its own growth strategies.

The SGH/Steel Dynamics offer would be reduced by any dividends paid by BlueScope and “given the time required to implement any takeover ... the effective value of the proposal for BlueScope shareholders would be less than $30.00 per share, with all upside value for the sole benefit of the consortium”, BlueScope said.

It also said that with the bidders using debt to fund a bid, BlueScope’s balance sheet be used to “help fund their opportunistic takeover proposal”.

The BlueScope statement came after its shares closed 1.1 per cent higher at $29.87.

The new takeover proposal was made to BlueScope on December 12 but only disclosed on Monday after it was leaked to the media.

Confirming its involvement on Tuesday, SGH said BlueScope’s Australian and North American businesses were strategically incompatible and “would benefit as standalone businesses under new ownership”.

Under their plan, SGH would buy BlueScope and then sell the target’s North American steel business to Steel Dynamics, the continent’s biggest metals recycler and fourth largest steel producer. SGH would retain the Australian operations, principally the Port Kembla steelworks in NSW.

BlueScope’s North Star business is the group’s biggest earner and is more attractive to suitors since US President Donald Trump last year imposed steep tariffs on steel to protect US producers.

SGH, 50.9 per cent owned by Kerry Stokes’ family companies, argues there are “substantial benefits to all BSL stakeholders from a strategic combination of BSL’s North American business with Steel Dynamics, and the creation of a standalone” business straddling the remainder of BlueScope.

North Star operates a steel mill in Ohio, about 130km from a Steel Dynamics-owned operation, that serves the US automotive and construction industries.

SGH’s other interests include a 20 per cent stake in Southern Cross Media, which now owns West Australian Newspapers Holdings, the publisher of The Nightly, The West Australian and The Sunday Times, after a merger with Seven West Media.