The Boral Limited (ASX: BLD) share price is in the spotlight as the stock is likely to be hit by corporate action or mergers and acquisitions (M&A) in FY21.
The speculation is given a new lease on life after Seven Group Holdings Ltd (ASX: SVW) revealed that it's lifted its stake in the embattled building products supplier.
The Seven Group share price jumped 3.3% to $17.43 while the Boral share price added 1.3% to $3.79 in morning trade.
In contrast, the S&P/ASX 200 Index (Index:^AXJO) gained 1.3% at the time of writing with every sector trading higher.
M&A spotlight shines bright on Boral
Coming back to Kerry Stokes' Seven Group, the Australian Financial Review reported that the construction equipment rental group upped its holdings in Boral to 16.3%.
Seven Group bought 50.5 million extra shares in Boral in July to add to its 12.2% holdings, prompting investors to ask what its game plan is.
It's unlikely that Seven Group will want to swallow Boral whole, in my view. Its primary interest is to split Boral into pieces and to acquire the Australian assets.
Boral's divestment and spin-off opportunities
This will allow Seven Group to broaden its offering to the infrastructure construction market at a time when governments are ramping spending on projects. Our state and federal governments are using infrastructure building as a key strategy to revive our COVID-19 afflicted economy.
Seven's move puts further pressure on Boral's incoming chief executive Zlatko Todorcevski, who has barely gotten his feet under his deck.
While Todorcevski isn't showing his hand yet, there's speculation that he will divest Boral's troubled US assets that were acquired under his predecessor Mike Kane.
Boral's road to redemption
All of Boral's woes can be laid at Kane's feet as he presided over six profit downgrades over two years.
It's little wonder the Boral share price is a woeful underperformer after having shed more than 40% of its value over the period.
Even the struggling CSR Limited (ASX: CSR) share price is holding up better. It too had to a few skeletons in the closet to clear but the stock only lost a more modest 11% in the past two years.
The star of the sector is James Hardie Industries plc (ASX: JHX) share price, which is a key pick in the industrials space for me.
Is the Boral share price a buy?
But Boral may have a chance to redeem itself in this financial year with new leadership and a list of ideas from activist shareholders on how to unlock value in the group – while benefitting themselves, naturally.
COVID-19 or no COVID-19, the next 12 months will likely be a roller coaster ride for Boral shareholders.
Investors with a strong stomach for risk might went to hop on, although I would wait till the reporting season to decide.
