SGH Ltd. and Steel Dynamics Inc. have submitted a revised non-binding takeover offer for BlueScope Steel Ltd., upping their offer from a previously rejected bid.
The revised offer of AU$32.35 per share, equivalent to AU$34 per share before deductions of AU$1.65, represents a compelling value proposition and highly attractive premium for BSL shareholders, according to the two companies.
The offer is the best and final offer from SGH and Steel Dynamics.
SGH and Steel Dynamics previously submitted an offer at AU$30 per share, which BlueScope rejected in January on the grounds that it undervalued the company.
In a separate statement, BlueScope said its board will consider the offer in light of the company’s fundamental value.
If the offer is accepted, SGH would on-sell BlueScope’s North American businesses to Steel Dynamics and would retain the remaining BlueScope operations.
SGH said the proposed acquisition aligns with its stated capital allocation criteria, with an opportunity to support performance improvement through the disciplined application of the SGH operating model.
The company said it is also the best steward of BlueScope’s Australia and its other businesses as a leading Australian industrial platform with diversified operations across a range of businesses and a strong capital foundation.
The proposed acquisition is still subject to several condition including unanimous recommendation from BlueScope’s board. There is no certainty that the proposal will result in a transaction.
Moody’s noted that if the deal was to proceed, it could be credit negative to BlueScope because the sale would include the divestment of North Star, a strong asset with high utilisation rates and a low-cost structure and with relatively stable earnings for the steel sector.
The deal could also reduce BlueScope’s overall scale and geographical diversification as its US businesses contribute around 55 per cent of the company’s underlying earnings.
