This article is from the Australian Property Journal archive
BILLIONAIRE Kerry Stokes’ Seven has slammed an independent report that was critical in building materials giant Boral’s rejection of its $1.9 billion buyout bid.
Seven Group, spearheaded by media mogul Kerry Stokes with his son Ryan at the helm as CEO, began a takeover of Boral in 2020 and has now accumulated a 73% stake. Ryan is now Boral chairman.
A report by Grant Samuel prepared for the Boral board included valuation of Boral shares at between $6.50 and $7.13, above Seven’s total offer of $6.05, or ranging between $5.96 and $6.39, incorporating cash and shares.
The three independent directors of Boral who form the company’s bid response committee, recommended shareholders reject Seven’s offer, citing the report’s assessment of Boral’s market value.
In an ASX statement yesterday, Seven said it was “extremely disappointed that there were fundamental errors in the independent expert report in Boral’s target’s statement dated 19 March 2024, which directly affected the valuation range and the independent expert’s conclusion”.
“As a consequence, the target’s statement is unbalanced, selective and risks fundamentally misleading Boral minority shareholders.”
It argued that Grant Samuel used inappropriate forecast scenarios in its valuation assessment – namely the inclusion of a carbon border adjustment mechanism that would apply a carbon tariff to imports in some circumstances, but which does not yet exist – while it also failed to consider critical cost of capital inputs; failed to appropriately consider relevant multiples as part of its valuation; that its revised property valuation incorporates errors; and that the property revaluation did not incorporate the impact of windfall gains tax, growth areas infrastructure contribution, or capital gains tax
It said Grant Samuel should revise the report and Boral’s bid response committee should recommend that Boral shareholders accept the offer.
