Aussie steelmaker tipped to rebuff fresh $13b takeover
Derek Rose |
A $13.2 billion tentative takeover offer for BlueScope Steel is likely to be knocked back by its board for undervaluing Australia’s largest steelmaker and presenting regulatory approval issues, analysts say.
US-based industrial metals group Steel Dynamics, which made has made three unsuccessful approaches for BlueScope previously, has teamed with the Australian billionaire Kerry Stokes-controlled SGH Limited for a fourth attempt to acquire the company’s North American operations.
The duo is offering $30 a share, a 27 per cent premium to the trading price of BlueScope shares when the offer was first made on December 12.
Shares in Port Kembla Steelworks operator on Tuesday soared 20.6 per cent to a 17-year high of $29.48 after the takeover offer was first made public on Monday night.
BlueScope’s board said it had appointed UBS as its financial adviser and Herbert Smith Freehills Kramer as its legal consultant as it considers the offer, but its statement seemed less than enthusiastic about the approach, which it described as unsolicited and highly conditional.
“I did read that reluctance,” said Morningstar equity analyst Esther Holloway.
“I think the board is possibly wanting a better price.”
Ms Holloway told AAP the offer seemed more than fair, based on her $19.80-per-share valuation of BlueScope, but she only gave the deal a 50-50 chance of going through.
“Sometimes when these deals happen, you see them as a sure thing. You think ‘that’s a really great premium; I don’t see why anyone wouldn’t accept that’.
“But this one, there’s that nuance in the background, detail that they’ve released that makes me think, maybe there’s question marks on that.”
Quiddity Advisors analyst David Blennerhassett said the offer needed a “decent bump” for BlueScope’s board to engage with it.
Analyst Arun George with Global Equity Research wrote that BlueScope’s statement strongly suggested the offer, like the previous three, would be rejected.
BlueScope said its board had unanimously rebuffed three previous unsolicited approaches from Steel Dynamics over the past 18 months, including one the US company asserted would have resulted in proceeds of at least $31 per share for BlueScope shareholders.
“These approaches were rejected as they significantly undervalued BlueScope and its future prospects,” the board said.
This latest non-binding offer involves breaking up BlueScope, with SGH offloading the North American operations to Steel Dynamics while retaining the Australian steel and Asia coated products and the New Zealand and Pacific islands businesses.
“We believe BlueScope’s Australian business is a strong strategic fit for SGH, and we have a proven track record of driving performance improvement in domestic industrial businesses,” SGH chief executive Ryan Stokes said.
“We intend to leverage our disciplined operating model and capital allocation approach to deliver better outcomes for stakeholders.”
Steel Dynamics chief executive Mark Millett said the North American assets, which include BlueScope’s North Star flat rolled steel mill and building and coated products businesses, would fit in well with its operations.
SGH owns construction materials group Boral, equipment hire firm Coates and equipment dealer WesTrac, and has a 40.2 per cent stake in television station owner Seven West Media.
BlueScope is leading an international consortium to explore the possible acquisition of the Whyalla Steelworks, which was placed into administration by the South Australian government in early 2025.
BlueScope has previously highlighted that the Whyalla assets include iron ore mines and structural rail, as well as the steelworks.
AAP
