Shares in BlueScope Steel Ltd (ASX: BSL) have fallen after the company's board again rebuffed a takeover offer from SGH Ltd (ASX: SGH) and Steel Dynamics Inc (NASDAQ: STLD).
The takeover consortium initially launched the conditional bid for BlueScope in January at $30 per share, which was quickly rejected by the BlueScope board as too low.
The consortium came back with a revised bid for BlueScope on February 18, offering $32.35 per share, which was, they argued, equivalent to $34 per share once BlueScope's interim and special dividends were added back in.
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Bid still too low
The board on Thursday responded to the revised offer, saying it was really only worth $31 per share, given that it planned to pay shareholders $1.65 per share plus another $1.35 in distributions.
The board added:
On this basis, the board has assessed that the scheme consideration would be only $31 per share given that no transaction with the consortium could be completed prior to the payment of the further distributions already announced by BlueScope. If a transaction completed in calendar year 2027, that would cause a further reduction in the offer price below $31 per share.
The board said in its statement that it stood by comments made prior to the increased bid being offered, that the proposal "significantly undervalued the company''.
It added:
The board maintains its view on the fundamental value of BlueScope. The revised proposal does not adequately address our valuation concerns. Consequently the offer price is not sufficient for the board to recommend a scheme of arrangement to its shareholders.
Value could be increased
The board said that despite the revised bid being a "best and final" offer, "we consider that there are various ways to increase the vale that BlueScope shareholders could receive''.
They added:
The board remains open to a transaction at a price that reflects the fair value of BlueScope.
The board said they were happy to look at the assumptions made in the financial modelling of the proposed acquirers and provide feedback.
The board of BlueScope also said there were onerous conditions to the proposed takeover, one of which was the requirement for "hard" exclusivity, meaning BlueScope could not engage with other potential bidders.
They also considered it onerous that the bidders wanted a unanimous recommendation from the board in favour of the bid before due diligence had started.
BlueScope shares were trading lower on Thursday, down 3.1% at $27.50. The company was valued at $12.4 billion at Wednesday's close.
