It turns out everyone loves ASX dividends! I mean, who would have thought it? Most ASX investors enjoy a good dividend payment for the same reasons any of us like to see labour-free passive income drop into our pockets.
Most of the time, ASX dividends are used to pay bills, buy more ASX dividend shares, or (less admirably) a big night out.
But today, we've got a reminder that dividends can be used as a dealmaker too.
One of the biggest deals currently sitting on the ASX is the takeover attempt on ASX 200 construction materials company Boral Ltd (ASX: BLD) by Seven Group Holdings Ltd (ASX: SVW). Seven has been after Boral for years now, with the two playing a fairly vigorous game of corporate cat and mouse.
Seven has amassed a stake in Boral of almost 80% over the past year or two but wishes to seal the deal with a full takeover.
Before today, the most recent development was the rejection last month of Seven's full takeover offer of 0.1116 Seven shares, as well as $1.50 in cash, for every Boral share owned. As we covered at the time, this valued Boral at approximately $6.07 a share.
Boral rejected this offer last month, citing concerns that the offer "does not represent appropriate value for minority shareholders".
But it appears that a fresh offer from Seven has finally clinched Boral's approval. The secret ingredient, or sauce, if you will? ASX dividends.
ASX dividends clinch Seven-Boral deal
In an ASX release this morning, Seven detailed an improved offer for Boral shares to 0.116 Seven shares, and a buffed-up $1.70 in cash per share. That $1.70 in cash includes a provision that will see Seven pay all shareholders, existing and new, a special dividend worth 30 cents per share, fully franked, upon completion of the deal.
Boral has also announced that it will pay a fully-franked dividend of 26 cents per share to investors, as well as potentially conducting a $350 million share buyback program on Boral's remaining outstanding stock.
If Boral pays out this dividend, Seven has said that its cash offer per share will reduce to $1.44 per share to reflect this.
In light of these new dividend proposals, as well as the reality that Seven controls nearly four-fifths of Boral's stock, Boral has finally consented to the deal and recommended shareholders vote in favour of it. Here's some of what the company said:
[Boral] believes that the SGH [Seven Group Holdings] Offer represents the most attractive outcome available to Boral Shareholders, particularly when measured against the risks of remaining as a minority shareholder now that SGH has a total interest of 78.8% in Boral.
Accordingly, the [Boral Bid Response Committee] unanimously recommends that Boral Shareholders ACCEPT the SGH Offer or sell their Boral Shares on-market.
So it appears that a slew of new ASX dividends has finally won the day for Seven, and Boral's ASX future now looks limited.
The Boral share price is up 1.82% in response today to $6.14 a share, while the Seven share price is flat at $40.03.
