Kerry Stokes’ Seven Group Holdings has lifted its stake in Boral to 35%, bringing to an end its battle with the company’s board and management.
In a filing with the ASX at midday Wednesday, Seven Group revealed it now held nearly 400 million Boral shares, which gives it control.
That was after Boral again told investors on Tuesday evening to reject the offer from Kerry Stokes’ Seven which is now officially $7.40 after acceptance levels pushed its stake above 34.5%.
“Their offer has been increased from the original $6.50 to $7.40, largely as a result of the Board’s determination to articulate the value in Boral for the benefit of all our shareholders,” Boral chief executive Zlatko Todorcevski told shareholders.
At 35% and with a week to go, the unconditional offer is now on the way to higher levels.
Stokes originally offered a bargain basement $6.50 a share in May and got no traction in the face of an aggressively run buyback program by Boral.
Then Boral managed to secure the sale of its North American assets to Westlake Chemical Corporation for $2.9 billion, raising the prospect of a higher dividend, or capital repayment big enough to hold off Seven Group.
As Boral’s share buyback continued and grew in size, Stokes changed the payment terms and made the offer unconditional, then lifted the offer price in a two-step plan.
If Seven Group got to 29.5% of Boral shares, he would pay $7.30 for each share.
But if he ended up with 34.5% of Boral shares by Wednesday, July 7, he would pay $7.40 a share.
Now the remaining Boral shareholders have until July 15 to also take up the offer too if they want in.
Stokes now is in the difficult position that if gets to more than 50.01%, he achieves control, but will still have the expense of running a separate company.
But he has a stake of dominating companies partly owned (Beach) or Seven West Media.
They, however, are small beer to the $4.25 billion he may have to spend to get to a controlling 50.01% stake.
Shareholders who remain in Boral can expect to face slim pickings so far as dividend growth is concerned. Seven West Media hasn’t paid a dividend for upwards of four years (but may return to doing so later this year).
Not unsurprisingly, Boral shares closed at $7.40.
