Seven Group proposes $2b bid for full ownership of Boral

Seven Group (ASX: SVW) is taking the next step in its acquisition of Boral (ASX: BLD) with a $2 billion offer to acquire the remaining shares it does not currently own in the construction materials company.

The Boral takeover commenced in 2020 and has resulted in the Kerry Stokes-led Seven Group currently holding an aggregate interest of 71.6%.

To mop up the rest, Seven Group is offering a minimum consideration of 0.1116 of its shares and $1.50 cash per Boral share, an aggregate value of $6.05.

The offer consideration will be increased by $0.10 in cash per Boral share if one or both of the following occur: the Seven Group bid reaches an aggregate interest of 80% or more; or the Boral board unanimously recommends that Boral shareholders accept the offer.

Consideration would increase by a further $0.10 in cash per Boral share if the bid reaches the 90.6% compulsory acquisition threshold.

The Boral board has told its shareholders not to take any action at this stage.

Growth-positive acquisition

Seven Group stated in announcing its latest offer that, by acquiring the Boral shares it does not already own, it intends to drive an acceleration of Boral’s performance journey and long-term growth.

Seven Group managing director and chief executive officer Ryan Stokes said the offer is an exciting opportunity to integrate Boral into Seven Group’s leading industrial services portfolio.

“The transaction has a compelling rationale for Seven Group and for Boral’s shareholders, who would become Seven Group shareholders as part of the transaction and continue to benefit from the operational improvement journey underway at Boral,” he said,

“The terms of the offer reflect our disciplined approach to capital allocation and we will retain a strong balance sheet position post-transaction.”

“The integration of Boral as a 100%-owned business is a natural evolution for Seven Group, supporting our position as a leading ASX industrial business [and] is expected to support and accelerate the delivery of the current ‘good’ to [a] ‘great’ performance journey.”

$3 million in annual savings

Noting that its offer price is higher than any closing price at which Boral has traded since 2007, Seven Group said the full takeover also provides an opportunity to reduce Boral’s annual compliance and listing costs by around $3m.

It would also provide Boral shareholders with access to Seven Group’s broader diversified portfolio of investments and market-leading returns.

Seven Group has revealed it would de-list Boral if it is not successful in completing the acquisition of 100% of its shares.