Seven Group lobbed a $6.50 a share offer to acquire all the shares of Boral it doesn’t own. This is a nil-premium offer as it’s priced the same as Boral’s last closing price.
The takeover of the building products group is seen as being opportunistic, if not sincere. This isn’t only because of the lack of a takeover premium and a string of other conditions.
Opportunistic takeover bid for Boral
Seven Group’s offer was probably made to circumvent “creep rules”. Under the Corporations Act, the industrial conglomerate is unable to increase its 23.2% stake in Boral unless it makes a takeover offer.
The bidder also stated it would be happy if the offer allowed it to increase its holdings in Boral to around 30%.
It sounds like a half-hearted takeover in my view.
Conditional takeover bid from Seven Group
Just to cover itself, Seven Group made the proposal conditional upon no material adverse change in relation to Boral or the S&P/ASX 200 Index (Index:^AXJO).
The first condition is commonly seen in takeovers, but the second less so. If our share market were to take a spill for whatever reason, Seven Group reserves the right to walk away.
Other conditions in the deal include the receipt of consent from the majority of lenders under Seven Group’s corporate loan facility in addition to other customary conditions.
It sounds like the bidder hasn’t sorted its finances even before it made the bid!
Boral shareholders asked to snub offer
It’s little wonder that Boral’s board is recommending investors reject the bid.
Seven Group’s interest in Boral is an open secret since the Kerry Stokes linked conglomerate bought a significant stake in struggling Boral a little over a year ago.
The takeover bid came a little quicker than many expected, although it’s in good company. There has been a number of high-profile takeover attempts currently being played out.
High profile M&As to hit the market
Investors also got excited by the Tabcorp Holdings Limited (ASX: TAH) share price after a suitor came knocking for parts of its business.
The takeover bid for the Boral share price has more chapters to play out. I also suspect we will see more mergers and acquisitions in the wings this year.
Best to get comfortable Fellow Fools!