Boral (ASX:BLD) share price seesaws after rejecting increased bid

The construction company says the latest Seven offer still “significantly” undervalues its shares.

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The Boral Limited (ASX: BLD) share price fluctuated today after the company recommended shareholders reject Seven Group Holdings Ltd (ASX: SVW)’s bid to increase its stake in the company.

At one point during intraday trade, shares in the construction materials company broke their 52-week record again and hit $7.36. At close of trade, however, its shares ended at $7.34 – flat on Friday’s close.

Let’s take a closer look at today’s news.

Why the Boral share price was in focus today

In a statement to the ASX, Boral recommended its shareholders reject the updated offer from Seven Holdings for up to 34.5% of its company for $7.40 a share. Seven’s initial bid of $6.50 a share was rejected for “undervaluing the company by 40%”.

As a result, Seven made a second bid of $7.30 a share on the proviso it increases its stake in Boral to 29.5%, or $7.40 a share if they obtain 34.5% of the company.

Boral says shareholders should continue to reject this offer from Seven and gave the following reasons.

  • The new price of $7.30 or $7.40 is not guaranteed. If not enough shareholders accept the offer, an investor agrees to sell their shares to Seven Holdings for the original bid of $6.50.
  • Boral says Seven’s latest offer still does not reach fair value. According to the company, the Boral share price is valued between $8.25 and $9.13. Boral believes Seven’s offer should be at this level if it wishes to increase its influence in the company. The construction materials business called Seven’s offer “opportunistic.”
  • Boral claims it is unlocking “significant value” for shareholders in the near term. Its recent sale of its North American business should result in a distribution of around $3.02 per share to shareholders, according to the statement. However, Seven has slammed the deal as a “rushed process” and a bargain price for the buyer.

Seven Holdings has made no comment at this time on Boral’s latest rejection.

Boral share price snapshot

Over the past 12 months, the Boral share price has almost doubled – rising by 94.7% in the period. The last time Boral’s share price was around its current levels was in April 2018, hovering around $7.30.

Boral has a market capitalisation of $8.7 billion.

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