SGH, Steel Dynamics bid $10.6 billion for BlueScope Steel in ‘best and final’ offer

By Sameer Manekar

Feb 18 (Reuters) – Australian steelmaker BlueScope Steel said it was considering a sweetened A$15 billion ($10.62 billion) takeover approach from SGH Ltd and U.S.-based Steel Dynamics, a month after rejecting a previous proposal.

Media billionaire Kerry Stokes-owned SGH and Steel Dynamics said they will now pay A$32.35 per BlueScope share in cash, calling it their “best and final” bid unless a higher rival offer emerges for all or part of the steelmaker.

The new offer price excludes the dividends BlueScope announced recently, and is 8% higher than the prior bid of A$30 a share, which was rejected as “undervaluing” the company. Including the dividend, the bid is worth A$34 a share.

“The board of BlueScope will consider the proposal relative to the fundamental value of the Company, along with the conditionality and executability of the proposal,” BlueScope said in a statement.

Shares of the Melbourne-based steel producer jumped as much as 6% in early trading to A$29.67 a share, staying below the prior rejected bid. Shares had retraced some of those gains to trade around A$28.825 as of 0015 GMT.

“We do not expect that a +13% increase is sufficient to bridge the prior gap to the Board’s view of fundamental value,” analysts at RBC wrote in a note, referring to the latest offer price including dividends.

“Our mid-cycle implied value is in the mid-A$30 a share range, and that an offer will need to be at least at this level to be successful.”

AustralianSuper, the steelmaker’s top shareholder with a 13.52% stake, declined to comment. It backed BlueScope last month in rejecting the prior offer, saying it “very significantly undervalued” the company.

SGH and Steel Dynamics on Wednesday maintained their plan to break up the Australian steelmaker along geographic lines — SGH would take the Australian operations and Steel Dynamics would get the North American unit.

Indiana-based Steel Dynamics has assets some 90 km (50 miles) from BlueScope’s plant in Ohio.

The proposal, first made in December, marked the latest attempt by Steel Dynamics to buy Australia’s largest steel producer, and comes as the sector grapples with U.S. President Donald Trump’s tariffs on steel imports.

Earlier in the week, BlueScope announced an interim dividend of 65 Australian cents per share after reporting better-than-expected first-half earnings and robust second-half performance. Last month, it announced a special dividend of A$1 per share.

($1 = 1.4118 Australian dollars)

(Reporting by Sameer Manekar in Bengaluru; Editing by Alan Barona and Lincoln Feast.)