The Board of BlueScope today announced that it has unanimously rejected the unsolicited, non-binding, indicative and conditional takeover proposal received from a consortium comprising SGH Limited (SGH, ASX:SGH) and Steel Dynamics, Inc. (Steel Dynamics, NASDAQ:STLD).

The takeover proposal offered to acquire all of the shares in BlueScope by way of a scheme of arrangement at a price of $30.00 cash per share, less the value of future dividends paid by BlueScope. Given the time required to implement any takeover of BlueScope, the effective value of the proposal for BlueScope shareholders would be less than $30.00 per share, with all upside value for the sole benefit of the consortium. The takeover proposal was subject to numerous conditions, including the consortium undertaking extensive due diligence on the Company on an exclusive basis and securing significant debt financing.

The Board unanimously rejected the takeover proposal on the basis that it very significantly undervalued BlueScope.

BlueScope Chair, Jane McAloon, said, “Let me be clear – this proposal was an attempt to take BlueScope from its shareholders on the cheap. It drastically undervalued our world-class assets, our growth momentum, and our future – and the Board will not let that happen.

"This is the fourth time we've said no, and the answer remained the same – BlueScope is worth considerably more than what was on the table.

“The BlueScope team is well recognised for driving and delivering value for our shareholders and customers. Since its restructure was completed in financial year 2017, BlueScope has invested over $3.7 billion in growth projects, delivered over $3.8 billion of shareholder returns and achieved an 18% average return on invested capital.

“Under the experienced leadership of the incoming MD&CEO, Tania Archibald, the Board is highly confident that management will continue to deliver superior shareholder value.”

The consortium’s takeover proposal failed to adequately recognise the value of BlueScope’s assets and comes at a time of lower steel spreads in Asia. If steel spreads and FX rates reverted to historical average levels, this would be expected to generate an additional $400 to $900 million of EBIT per annum relative to FY2025.

The takeover proposal also failed to adequately reflect the value expected to be delivered from various initiatives, including:

1. The acceleration in free cash generation as the current $2.3 billion capital program is completed,
2. The targeted $500 million per annum earnings uplift from growth initiatives and investments well underway,
3. BlueScope’s ongoing business improvement initiatives, including the $200 million of cost and productivity improvements expected to be delivered in FY2026, and
4. The monetisation of BlueScope's 1,200 hectare land portfolio, now being rezoned and developed.

The takeover proposal also fails to appropriately value the significant synergies and other benefits available to the consortium. Further, given the consortium are seeking to debt-fund the takeover, and BlueScope had virtually no net debt at FY2025, the bidders are seeking to use BlueScope’s balance sheet to help fund their opportunistic takeover proposal.

Read the ASX Announcement.