Why are Boral shares outperforming the ASX 200 today?

This building materials company has received a takeover offer.

| More on:
Smiling couple looking at a phone at a bargain opportunity.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Boral Ltd (ASX: BLD) shares are catching the eye on the ASX on Monday.

In morning trade, the building materials company's shares are up 3.5% to $6.05.

This compares to the ASX 200 index, which is up 0.1%.

Why are Boral shares outperforming the ASX 200?

Investors have been buying the company's shares this morning after it received a takeover offer from its largest shareholder, Seven Group Holdings Ltd (ASX: SVW).

According to the release, the investment company, which owns over 70% of Boral, has tabled a $6.05 per share offer to take full control. This comprises 0.1116 Seven Group shares and $1.50 cash per share.

This represents a modest 3.5% premium to where Boral shares ended the week on the ASX.

But the price may not stay there. The release notes that the offer price will increase to a maximum of $6.25 per share if it reaches the 90.6% compulsory acquisition threshold.

If that happens, it would mean a more palatable 6.8% premium to where Boral shares last traded.

But don't expect a better offer any time soon. It advised that "it will not acquire Boral Shares for an amount in excess of $6.25 for at least 12 months following the close of the Offer."

Seven Group's CEO, Ryan Stokes, commented:

Today's announcement represents an exciting opportunity to integrate Boral into SGH's leading Industrial Services portfolio. The transaction has a compelling rationale for SGH, and for Boral's shareholders, who would become SGH shareholders as part of the transaction and continue to benefit from the operational improvement journey underway at Boral. The terms of the Offer reflect our disciplined approach to capital allocation, and we will retain a strong balance sheet position post-transaction.

Boral says take no action

As things stand, Boral is advising its shareholders to take no action.

Shareholders are advised to take no action in relation to the Offer, or any correspondence received from SGH, until they receive further information from Boral in relation to the Offer.

A board committee of Boral's independent directors has been established and is currently considering the offer.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

A group of people gathered around a laptop computer with various expressions of interest, concern and surprise on their faces. All are wearing glasses.
Technology Shares

Guess which ASX 300 tech stock is making a 'cutting-edge' US$28m acquisition

What is this tech stock buying? Let's find out.

Read more »

Businessman cheering at desk with arms in the air
Technology Shares

Xero share price halted amid $3.9b game-changing US acquisition

The market darling is aiming to accelerate growth in the US with this major deal.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Which ASX All Ords stock is rocketing on takeover news?

This payments company has accepted a takeover offer.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Mergers & Acquisitions

Guess which ASX 300 stock is jumping 7% on merger news

This struggling company could be close to merging with a rival.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock is up 50% on takeover offer

A takeover offer is getting investors excited this morning. Let's dig deeper into things.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Santos shares rocket on $30b takeover offer

This energy giant could be going private after receiving a takeover approach.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX 300 share just received a takeover offer

This share is jumping today after receiving a takeover offer.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

Johns Lyng Group shares enter trading halt. Is it a takeover target?

This ASX 200 stock looks ripe for a takeover.

Read more »