BlueScope, the Australian steel producer, announced that it has received not one but three different unsolicited takeover bids. This represents a sea change in one of the world’s most storied corporate landscapes. The proposals come amid BlueScope contending with soft demand that weighs on its fiscal 2025 profits. Because of the incredible, fundamental loss of business the virus imposed on it, the company is now considering its strategic alternatives.
Two of the strategies came from a team that was part of the original consortium led by Steel Dynamics. The initial bid started at AU$27.50 per share, but the revised offer raised that amount to AU$29.00 per share. SGH and Steel Dynamics came back with a counter offer, in cash, raising the bid to AU$30 per share. This change makes things even more interesting to the possible acquisition.
BlueScope has signed a 12-month exclusivity arrangement with SGH and Steel Dynamics to negotiate this transaction in more detail. The company has pledged significant financial resources to further discussions, demonstrating its bona fides and seriousness of purpose in negotiating with the consortium.
SGH and Steel Dynamics have come out with a highly detailed, considered and disciplined proposal valuing BlueScope’s North American operations at AU$24 per share. They have a valuation on their other assets, at least AU$9 per share. BlueScope’s complex operating model As mentioned above, BlueScope runs five different businesses in North America. Moreover, it exports a small amount of steel from Australia to the U.S., so these operations are key to their global strategy.
As much as there seems to be a market for potential buyers, BlueScope’s management has sounded hesitant. They rejected the earlier unsolicited offers from the Steel Dynamics-led consortium, stating that they “significantly undervalued BlueScope and its future prospects” and presented “significant execution risk in relation to regulatory outcomes.”
At time of writing, BlueScope is still considering these proposals. It’s been hurt by a big recent write-down on its U.S. metal coatings unit, which has added even more pressure to its fiscal outlook for 2025. AustralianSuper, the company’s largest shareholder, controls another large share at 12.51% of BlueScope. This ownership creates an additional wrinkle in any takeover talks.