Australian diversified investor Seven Group Holdings (SVW.AX), headed by billionaire Kerry Stokes and his family, has offered a big chunk of its multi-brand empire in a bid for complete control of building products group maker Boral. The company already owns nearly 72% of Boral, and the bid launched on Monday is designed to mop up the rest of the company.
Seven has backed its offer with both carrots and sticks. It will offer a minimum of A$6.05 per share in cash and shares for the remaining 28.4% of Boral that it does not own, valuing the company at A$6.67 billion ($4.35 billion). This is a 3.4% premium to Boral’s last closing level and a record high for the company.
The offer represents a big bet that Australia’s infrastructure spending boom will be maintained in coming years, which is helping to drive growth across the economy. Boral has reshaped its business in recent years, bolstering its domestic business and selling off international assets as governments globally are stepping up their spending initiatives. The move chimes with the broader trend of investors turning to countries with strong economic fundamentals to make investments that will deliver growth in the long term.
For its part, Seven Group says the move will allow it to leverage its operational expertise and scale to drive cost savings at Boral. The company is committed to ensuring the offer represents a “fair value” for shareholders. It said it would raise its bid by 10 Australian cents if it achieves an aggregate 80% ownership stake in Boral, the company’s board unanimously recommends the takeover to shareholders, or both.
In addition to its significant stake in Boral, Seven Group’s diversified holdings include industrial equipment firm Westrac, Coates Hire, and a controlling interest in ASX-listed oil and gas producer Beach Energy. Its media operations include Seven Network and the former WA News, which it acquired in a controversial related party transaction that saw its previous owner, private equity firm KKR, walk away with a handsome profit.
