Seven Group Holdings has escalated tensions with takeover target Boral, accusing the construction materials giant of breaching blackout rules by continuing its share buy-back program into the new financial year.
The Kerry Stokes-backed investment house this morning claimed Boral was in possession of material information on its annual performance – and should therefore suspend its share buy-back – a move that has helped support the price of Borals stock as it fights off the overtures of its major shareholder.
Seven Group yesterday increased its bid for construction materials firm Boral. Credit:
We note that the Boral board continued to buy back shares yesterday, despite the company being in blackout and despite the company committing it would not use the buy-back as a takeover defence tool, Seven wrote in a release.
Following the close of the financial year, the company is in possession of material information on the performance of the business, particularly the underperformance of Boral Australia, which has not been adequately disclosed to the market in the targets statement.
Seven said it expected Boral to suspend the buy-back during the blackout, consistent with its last buy-back in 2015.
Following the close of the Seven Group offer, we look forward to returning to the Board room and participating in any decisions around capital management and will make sure the company acts prudently with shareholders funds.
Seven Group chief executive Ryan Stokes is a member of the Boral board and the company has slowly been increasing its stake in the construction firm with a view to having more of a say in how it is run.
Seven – which had a 23 per cent stake when it lobbed an initial bid of $6.50 per share in May – has been adding to its slice through the buy-back.
Yesterday it secured a path to taking a 29.5 per cent in Boral and lift its offer to $7.30 per share, as promised last week.
Seven will lift its bid to a maximum $7.40 per share if it secures 34.5 per cent of the company by the close of business on July 7.
It said yesterday it would not increase its offer under any circumstances.
Boral, however, continues to urge investors to reject Sevens overtures, arguing the offer remains well below the $8.25 to $9.13 per share valuation given by independent expert Grant Samuel & Associates.
The Seven Group offer is opportunistic and appears to be timed to take advantage of an improving outlook for Boral, the company said yesterday.
Boral shares were last 0.1 per cent higher at $7.37.
The Seven takeover offer closes on July 15.