BlueScope Steel shares drop 2% after rejecting $9 billion takeover bid

By Scott Murdoch

SYDNEY, Jan 8 (Reuters) – Shares of BlueScope Steel were down 2% in early trading on Thursday after the company rejected a A$13.2 billion ($8.87 billion) takeover offer from Australian conglomerate SGH and U.S.-based Steel Dynamics.

BlueScope shares were trading at A$29.27, slightly below the A$30 a share cash offer price, indicating investors think a deal could emerge despite the board’s official rejection.

SGH shares were trading 0.7% lower after BlueScope said the offer “very significantly undervalued” the Australian steelmaker after trading closed on Wednesday. Steel Dynamics’ shares closed 2.8% lower in U.S. trading on Wednesday.

Macquarie analysts said they expected the takeover battle to continue, with the bidders highly likely to reconsider their position. Some investors said even before the board’s rejection that the price needed to be higher to secure their support.

The offer was made at a 26.8% premium to the closing price of BlueScope shares on December 11, the day before the bid was received. The offer was not disclosed until late on Monday.

BlueScope said it had received three offers from Steel Dynamics since 2024 and its Chair Jane McAloon said the new bid from SGH and Steel Dynamics was an attempt to buy the company “on the cheap”.

SGH, the growing industrial company controlled by Australian billionaire Kerry Stokes, plans to buy BlueScope and sell its North American assets to Steel Dynamics.

SGH and Steel Dynamics did not respond to requests for comment on the bid’s rejection.

BlueScope said its board rejected the bid as the offer would be adjusted for future dividend payments and take a long time to be finalised, which would reduce the value of the proposal.

The company also said it expected to generate between A$400 million and A$900 million in extra earnings if steel spreads and foreign exchange rates reverted to historical average levels from recent lower levels. Steel spreads measure the difference between the steel price and input costs, and are a key measure of profitability in the industry.

($1 = 1.4877 Australian dollars)

(Reporting by Scott Murdoch; Editing by Chris Reese and Jamie Freed)