CSR (ASX:CSR) has confirmed that it has received a $9 per share bid approach from French building products giant Saint-Gobain.
At that price, any offer would value the Australian company at $4.3 billion.
The suggested price is a skinny $1.05 to CSR’s last price on Wednesday of $7.95, but it is 98 cents above the company’s 52-week high of $8.02.
CSR confirmed the approach in an early morning statement to the ASX Thursday. It said part of the indicative offer was that CSR could pay a final 25 cents a share dividend but this would reduce the offer price, which would make the premium even smaller.
As with these approaches, Saint-Gobain’s offer is non-binding and indicative at this stage, but it has succeeded in securing due diligence from CSR’s board with the $9 per share offer.
The French have structured the proposal as a scheme of arrangement. Seeing there are no big shareholders, it's likely this approach would work, unlike at Origin where AustralianSuper sank the Canadian-US offer.
Saint-Gobain is a giant in comparison to CSR with a market cap of more than $A56 billion (over 34.6 billion euros).
CSR operates in Australia and New Zealand, mostly in building products such as Gyprock plasterboard, Martini, Himmel Interior Systems, and Rondo rolled-formed steel products joint venture), construction systems (Hebel autoclaved aerated concrete products, AFS walling systems, and Cemintel fiber cement), and masonry and insulation (Bradford insulation, Bradford energy solutions, Edmonds ventilation systems, Monier roofing, PGH Bricks and Pavers, and New Zealand Brick Distributors joint venture).
Its main earnings growth driver in the past couple of years has been property development on its own reserves of brick-making clay which are surplus to needs, especially in Western Sydney, Queensland, and Victoria.
Its Aluminum segment relates to its interest in Gove Aluminium Finance Limited, which in turn holds a 25% interest in the Tomago aluminum smelter. That would be of little interest to the French giant but finding a buyer will be hard given that the business is energy-intensive and Rio Tinto wrote down the value of its Australian alumina refineries in 2023 by $1.2 billion.
But Rio Tinto controls 51.55% of Tomago through its Alcan business.
The $9 per share offer is not the first approach from the French group.
According to CSR’s early morning statement “The Proposal follows an earlier indicative offer and a period of negotiation, which included the provision of value-impacting due diligence. Following review of the Proposal, the CSR Board unanimously resolved to pursue the Proposal.
"CSR is currently providing Saint-Gobain with confirmatory due diligence access to progress to a binding transaction at an agreed offer price of $9.00 per share.”
"The CSR Board notes that there is no certainty that the Proposal will result in a binding offer for CSR."
