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Last night's $6.1 billion takeover bid from Seven Group (ASX: SVW) for Australian construction materials leader Boral (ASX: BLD) has been rebuffed by the target's board, calling on shareholders to reject the proposal by taking no action.
Seven already has a 23.18 per cent stake in the company but aims to cement its ownership with an offer at yesterday's closing price of $6.50 per share, offering no premium for the company whose value has risen by more than 20 per cent since the start of 2021.
Flush with cash following a $500 million capital raise last month, Seven has wasted little time in trying to put its new funds to use with the offer, effectively valuing the target at its most recent market valuation of $7.91 billion.
The suitor has also put a conflict of interest protocol in place with its CEO Ryan Stokes taking a step back from the Boral board and committee.
Seven is unable to acquire further shares on market in Boral due to the Corporations Act restrictions in place preventing "creeping", but in its bidder's statement the suitor has indicated it would be satisfied if the offer helped lift its shareholding to around 30 per cent.
Boral, whose shares have been tracking in the direction of three-year highs, has not warmed to the idea however.
"Boral has formed a committee of its directors, excluding Mr Ryan Stokes, to consider the Offer," the company said in a response this morning.
"This committee believes the Offer is opportunistic, undervalues the Company and unanimously recommends that shareholders reject the offer once it opens by taking no action.
"Boral management remain committed to the Company's strategic goals including the transformation targets set across the group and the ongoing process in relation to its North American portfolio."
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