Lending Association

Kerry Stokes’ Seven Group Holdings Rebuts Boral’s Rejection

The Kerry Stokes-controlled Seven Group Holdings has strongly rejected the rejection of its takeover bid for the minorities of Boral by the independent directors of the building products company.

In a reply to the rejection a week ago of their offer by independent directors of Boral, the Stokes company accused the independent expert (Grant Samuel) of making “fundamental errors” in its report and claimed the Target Statement from the directors was “unbalanced and selective.”

Seven Group already controls around 72% of Boral and wants to mop up the minorities with a low priced structured offer designed to drive acceptances (the minorities will get more if they accept the bid quickly).

The proposal of a minimum of $6.05 per Boral share consists of 0.1116 Seven Group shares and $1.50 cash. The offer could go as high as $6.39 per share if certain acceptance rates are met.

Grant Samuel, the independent expert firm, assessed fair value for Boral in the range of A$6.50-A$7.13 per share, the company said. Grant Samuel said the mop offer from Seven group was neither fair nor reasonable.

On Tuesday Seven Group rejected the independent experts report and the decision by Boral independent directors to reject the offer.

“Seven Group (SGH) is extremely disappointed that there were fundamental errors in the Independent Expert Report in Boral’s Target’s Statement dated 19 March 2024, which directly affected the valuation range and the Independent Expert’s conclusion.

“As a consequence, the Target’s Statement is unbalanced, selective and risks fundamentally misleading Boral minority shareholders.”

Seven group went on to highlight what it said were errors in the report and Grant Samuel’s conclusions and decisions on the fairness and the reasonableness of the offer.

“SGH considers that Grant Samuel should revise its Independent Expert’s Report to correct these fundamental errors, and Boral’s Bid Response Committee should amend its recommendation to Boral Shareholders as a result.”

The Stokes company went on to again point out the risks of Boral shareholders not accepting the offer which SGH said could see the value of the shares (if retained) fall because of less liquidity and index weighting and the lack of franking credits (which hasn’t deterred SGH from wanting Boral for itself) and the possibility dividends will not be paid for some time.

SGH said “The Maximum Consideration under the Offer is Best and Final and will not be increased, with a competing bid highly unlikely.”

“SGH will not acquire Boral shares for an amount above $6.25 per share for at least 12 months following the close of the Offer,” Seven Group emphasised.