BlueScope Steel urges shareholders to keep the faith with $438 million special dividend
BlueScope Steel has urged shareholders to keep the faith in the face of takeover interest by returning $438 million of surplus cash through a special dividend.
The $1-a-share unfranked payout aims to underline BlueScope’s assertions that it can do better for shareholders than a rejected $13 billion offer by the Stokes family’s SGH and US group Steel Dynamics.
“This dividend decision is part of BlueScope’s established capital management framework and is independent of any prior or potential future proposals for the company,” Australia’s biggest steelmaker said on Wednesday.
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By continuing you agree to our Terms and Privacy Policy.Outgoing BlueScope chief executive Mark Vassella said the special dividend “demonstrates BlueScope’s ability to generate and distribute returns to its shareholders”.
“With a clear line of sight to the completion of our current significant capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further with the enhanced earnings of the business,” Mr Vassella said.
“The board will continue to carefully balance investment in growth with shareholders returns as cash flows build.”
BlueScope’s board last week emphatically rejected a $30-a-share offer by SGH and Steel Dynamics - the fourth approach by the US steelmaker in two years - saying it significantly undervalued BlueScope.
The suitors want to split BlueScope, with SGH retaining the Australian operations and Steel Dynamics taking the more profitable steel businesses in North America.
Under their proposal, the rejected offer would be reduced to $29 by the dividend. Any other payouts would further impact their price.
However, BlueScope and the bid partners remain far apart on value, with the likelihood that SGH and Steel Dynamics will have to add several dollars to their offer to interest the BlueScope board in talks.
The surplus cash being returned is derived from BlueScope’s $167m sale of a 50 per cent interest in the Tata BlueScope joint venture, and land sales.
BlueScope shares were 10¢ better at $29.85 as at 8.55am.
