In a statement released on Wednesday, the board described the bid as “significantly undervalued.”
BlueScope shares closed the day up 1.12% at AUD 29.87. While this level was slightly below the AUD 30 per share offer announced to the public on Monday, it signaled that the market was pricing in the likelihood of the deal going through.
“Fourth time no”
Board Chair Jane McAloon made a clear statement, noting that the offer was well below the company's value: “This offer was an attempt to acquire BlueScope cheaply from its shareholders. This is the fourth offer we have rejected, and our response remains unchanged: BlueScope is worth significantly more than the price on the table.”
SGH and Steel Dynamics did not respond to requests for comment outside of US and Australian business hours.
The company's statement said the offer would decline when future dividends were taken into account, and that finalizing the deal would take a long time, which would further lower the price per share from the A$30 level. BlueScope also emphasized that financing the offer with debt indicates that “BlueScope's debt-free balance sheet is being sought for a opportunistic takeover.”
The structure of the acquisition plan sparked debate
Under the agreement, SGH, controlled by Australian billionaire Kerry Stokes, would acquire BlueScope and then transfer the company's North American assets to Steel Dynamics.
Some investors argued that the share price should have been higher even before the deal was rejected, despite being close to the offer level. Jamie Hannah, deputy head of the investment division at VanEck, an investor in both BlueScope and SGH, pointed out that the current offer was insufficient, stating, “It's nice to see interest in BlueScope, but looking at the valuations, we believe this offer is inadequate. The trend suggests that if they want to convince shareholders, they will have to increase the offer.”
Source: Reuters
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