BlueScope Steel Limited, a publicly-traded Australian steel manufacturer, has just turned down its third unsolicited takeover offer. Of those, two of these approaches were from a consortium headed by Steel Dynamics. The offers have garnered significant attention on Wall Street as the company weathers its valuation during a tumultuous history of financial losses and defaults.
The Steel Dynamics-led consortium’s original bid was AU$27.50 per share. They subsequently raised their offer to AU$29.00 per share. However, BlueScope deemed these proposals inadequate.
“These approaches were rejected as they significantly undervalued BlueScope and its future prospects, and presented significant execution risk in relation to regulatory outcomes,” – BlueScope
We had two distinct written offers from Steel Dynamics. Initially on December 12, SGH and Steel Dynamics upped their cash offer to a firm offer of AU$30 per share cash which was a 26.8 % premium to BlueScope’s closing price of AU$23.66 on December 11. At the time, this new offer was a 22.7% premium on the company’s last close showing that there was still room to play in the negotiation.
BlueScope’s five businesses within North America have traded at times at a value of 2.5x BlueScope’s current AQ$24 per share valuation. Broker analysts have further valued BlueScope’s other assets at a minimum at AU$9 per share. The company recently experienced a significant write-down on its U.S. metal coatings unit, which is expected to impact its earnings projections for fiscal 2025.
Even with these headwinds, there is no turning BlueScope away from honing its operational craftsmanship. To do that, the company recently entered into a 12-month exclusivity agreement with SGH and Steel Dynamics. This agreement not only allows more conversations around the acquisition to happen, but bolsters the acquisition’s place in a volatile market climate.
BlueScope has shipped a very small volume of steel from Australia to the U.S. throughout its long history. This global aspect of its business may very well be the trump card in coming negotiations. AustralianSuper is BlueScope’s largest shareholder at 12.51%. CMV Stake This stake introduces yet another layer of complexity to the ongoing saga that is the company’s future.
Still, stakeholders are understandably and rightfully anxious to see how BlueScope, as a corporate entity, deals with these unsolicited offers. They are looking for what this means for the company’s future strategic direction and market valuation as things continue to change.