Boral sells its products business in the United States after rejecting Seven’s offer

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The logo of Boral Ltd, Australia’s largest supplier of building materials and construction products, adorns a wall in the lobby of its head office in Sydney, Australia, November 21, 2016. REUTERS / David Gray

June 21 (Reuters) – Australian Boral Ltd (BLD.AX) announced that it would sell its North American construction products business to a unit of the NYSE-listed Westlake Chemical Corp (WLK.N) for $ 2.15 billion, putting the brakes on a takeover bid by Seven Group (SVW.AX).

Boral shares rose 4% to AU $ 7.06, their highest level since October 2018, after the building and building materials supplier revealed its agreement to sell the US-based company in a disclosure responding to Seven’s offer.

Boral had previously asked shareholders to reject a zero-premium off-market offer from Seven Group, a conglomerate controlled by Australian media owner Kerry Stokes, claiming it was undervaluing the company.

Seven owns 23.18% of Boral and made the offer in May after failing to increase its stake to 30% due to regulatory setbacks.

Seven Group said the company was sold for a loss in a hasty response to its offer.

“Our view is that Boral should have secured more. This business has outperformed while the Australian business is underperforming,” a spokesperson for Seven said in an email.

One analyst said the US deal would not have a big impact on Seven’s takeover attempt.

“Seven Group made an offer that had to be rejected to allow them to continue buying more,” said Mathan Somasundaram, CEO of Deep Data Analytics.

“Seven Group’s historical trend in these scenarios suggests that they will get as much as they are allowed and stay there as a blocking issue. When the cycle weakens, they will come in and gradually take control,” he said. -he declares.

Boral shares have jumped more than 30% this year as monetary and fiscal stimulus helped the Australian real estate market rebound from pandemic lows of last year.

Boral CEO Zlatko Todorcevski said the company expects a large surplus to be returned to shareholders as a result of the sale, with its net debt target dropping from AU $ 1.5 billion to AU $ 1 billion. , AU $ 3 billion.

($ 1 = AU $ 1.3330)

Report by Tejaswi Marthi in Bengaluru; Editing by Christopher Cushing

Our Standards: Thomson Reuters Trust Principles.


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