The Boral Limited (ASX: BLD) share price reached a new milestone this morning. In early trade, Boral shares hit a one-year high of $7.06 before partially retreating. At the time of writing, shares in the construction materials company are swapping hands for $6.79 – up by 0.15%.
By comparison, the S&P/ASX 200 Index (ASX: XJO) is down by a whopping 1.87%.
The price jump came after the company announced the sale of its North American business and guaranteed the term of its CEO and CFO for at least one more year.
Let's take a closer look at today's news.
Why the Boral share price is in the green
Boral shares are defying the wider market selloff today following the company's latest update.
But before delving deeper into the ASX statement, it's worth noting the announcement could have an impact on the proposed offer by Seven Group Holdings Ltd (ASX: SVW) to take over Boral. This morning, Boral updated its target statement to reflect the North American sale and shoring up of the CEO and CFO positions. Seven has not yet released any further updates regarding its takeover bid following Boral's news.
Sale of North American business
In its first statement, Boral declared it had sold its North American building products business to a subsidiary of Westlake Chemical Corporation (NYSE: WLK) for US$2.15 billion.
The sale is subject to the usual processes and conditions, according to Boral. Though the company expects the sale to be finalised within the first half of FY22.
Boral CEO and managing director Zlatko Todorcevski said:
We are pleased to announce that we have entered into an agreement to sell Boral's North American Building Products business, which is expected to unlock significant value for Boral's shareholders. This agreement follows an extensive market testing process in which we received strong interest from a broad range of high calibre potential buyers.
The Board will determine the most appropriate way to return surplus capital to shareholders taking into account the availability of franking credits, the relative share price and the preferences of Boral shareholders as a whole.
Updated CEO and CFO arrangements
In its second statement, Boral said it will "strengthen" the job security of its CEO, Zlatko Todorcevski, and CFO, Tino La Spina. To that end, the company is guaranteeing neither will be removed from their positions without cause until July 2022. If Boral breaks this arrangement, it will be liable to pay either manager the bonus that would be owed to them up to July 2023.
Boral share price snapshot
Over the past 12 months, the Boral share price has increased by more than 80%. As stated, the company is subject to a takeover approach by Seven Holdings. The Boral board has asked its shareholders to reject the offer, saying it undervalues the company.
Based on the current Boral share price, the company has a market capitalisation of around $8 billion.
