Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

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The Boral Ltd (ASX: BLD) share price is falling in morning trade.

At the time of writing, the building materials company's shares are down 1.5% to $6.08

What's going on with the Boral share price today?

This morning, Boral released an update on its takeover approach from major shareholder Seven Group Holdings Ltd (ASX: SVW).

As a reminder, Seven Group has offered 0.1116 shares and $1.50 cash for each Boral share. This equates to approximately $6.068 based on yesterday's prices.

According to the release, the Bid Response Committee (BRC) of Boral has released its Target's Statement in response to the offer from Seven Group.

It notes that based upon Seven Group's Bidder's Statement, 11,660,274 Boral shares have been accepted into the takeover offer since it opened on 4 March. It notes that this represents only 1.06% of Boral's total share capital.

And based on what the BRC is saying, Seven Group may struggle to gain significantly more support from shareholders.

That's because the BRC, chaired by Rob Sindel as lead independent non-executive director, has recommended that Boral shareholders reject the Seven Group offer. This is because of its view that the offer "does not represent appropriate value for minority shareholders."

Accordingly, each Boral director on the BRC who holds Boral shares intends to reject the offer.

Offer 'undervalues Boral'

A spokesperson for the BRC commented:

We have carefully evaluated the SGH Offer and recommend that shareholders should REJECT the SGH Offer as it undervalues Boral. The Independent Expert has concluded that the SGH Offer is neither fair nor reasonable, supporting the BRC's view. Boral management is ahead of schedule in delivering on its 'Good to Great' improvement strategy and is only part way through this journey.

In addition, Boral has today announced that it has surplus property to which Grant Samuel has attributed a value of $1.4 billion to $1.6 billion in its Independent Expert's Report, equivalent to $1.26-$1.44 per share, which we expect to deliver significant value creation to Boral shareholders in the future. We encourage shareholders to remain with Boral and fully participate in the future value available through continued direct ownership of Boral.

The Independent Expert has assessed the offer and concluded that it is not fair. It has estimated the fair market value of the Boral share price to be in the range of $6.50 to $7.13 per share.

This compares to its last close price of $6.18 and the offer price of approximately $6.068.

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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