Why are Boral shares outperforming the ASX 200 today?

This building materials company has received a takeover offer.

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Smiling couple looking at a phone at a bargain opportunity.

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Boral Ltd (ASX: BLD) shares are catching the eye on the ASX on Monday.

In morning trade, the building materials company's shares are up 3.5% to $6.05.

This compares to the ASX 200 index, which is up 0.1%.

Why are Boral shares outperforming the ASX 200?

Investors have been buying the company's shares this morning after it received a takeover offer from its largest shareholder, Seven Group Holdings Ltd (ASX: SVW).

According to the release, the investment company, which owns over 70% of Boral, has tabled a $6.05 per share offer to take full control. This comprises 0.1116 Seven Group shares and $1.50 cash per share.

This represents a modest 3.5% premium to where Boral shares ended the week on the ASX.

But the price may not stay there. The release notes that the offer price will increase to a maximum of $6.25 per share if it reaches the 90.6% compulsory acquisition threshold.

If that happens, it would mean a more palatable 6.8% premium to where Boral shares last traded.

But don't expect a better offer any time soon. It advised that "it will not acquire Boral Shares for an amount in excess of $6.25 for at least 12 months following the close of the Offer."

Seven Group's CEO, Ryan Stokes, commented:

Today's announcement represents an exciting opportunity to integrate Boral into SGH's leading Industrial Services portfolio. The transaction has a compelling rationale for SGH, and for Boral's shareholders, who would become SGH shareholders as part of the transaction and continue to benefit from the operational improvement journey underway at Boral. The terms of the Offer reflect our disciplined approach to capital allocation, and we will retain a strong balance sheet position post-transaction.

Boral says take no action

As things stand, Boral is advising its shareholders to take no action.

Shareholders are advised to take no action in relation to the Offer, or any correspondence received from SGH, until they receive further information from Boral in relation to the Offer.

A board committee of Boral's independent directors has been established and is currently considering the offer.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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