The Boral Limited (ASX: BLD) share price was crunched 7.95% today after the construction product company's main shareholder, Seven Group Holdings Ltd (ASX: SVW) decided to sell a portion of its stake.
For readers who don't know, Seven owns more than 70% of Boral. Let's look at what happened.
Boral share sell-down
Seven announced to the market this morning that it had successfully sold a 1% stake in Boral through an aftermarket block trade. It represents a sale of 11.1 million Boral shares at an average price of $4.90.
Seven pointed out that it bought 3% of Boral in October 2022 at $2.90 per share, which increased its holding to 72.6% at the time.
The announced sale decreases Seven's holding in the construction products business to 71.6%. The sale was done at a premium to the average Boral share price over the past 30 days, 90 days and 180 days.
Seven boasted that the transaction demonstrates its disciplined approach to its ongoing investment in Australia's "leading" construction materials business.
Despite the sale, Seven said there was no change to its strategy or commitment to Boral and the delivery of its "performance journey".
How will this affect Seven's financials?
In terms of the profit and loss, the company said there won't be an accounting recognition on the gain because after the transaction it still retains a controlling interest in Boral and this will mean it continues to consolidate its earnings within the Seven financial accounts.
CEO commentary
The Seven managing director and CEO Ryan Stokes said:
We are pleased to see the strong recovery in Boral's share price. Consistent with our disciplined approach to capital management, SGH has elected to sell 1% of Boral to capture the market valuation, while retaining control of the business.
SGH remains committed to Boral and its performance journey and will continue to support its management team as they work to restore appropriate profitability to one of Australia's great industrial businesses.
Boral share price snapshot
Since the start of 2023, Boral shares have risen 60% and the Seven share price has gone up by 34%. This compares very well to the S&P/ASX 200 Index (ASX: XJO), which has only gone up 4%.
