Takeover target woos shareholders with special dividend
Australia’s biggest steelmaker will return hundreds of millions of dollars to shareholders after turning down a $13 billion takeover offer.
BlueScope Steel investors will receive a total of $438 million as part of a special dividend payment of $1 per share after the bid from SGH, controlled by the Stokes family, and US bidding partner Steel Dynamics was rejected.
The cash payment will be met from excess cash generated from the sale of certain assets, including a 50 per cent stake in the Tata BlueScope joint venture, which supplies coated steel products to the Indian market.
The Illawarra steelworks operator has also offloaded 33 hectares of land at West Dapto, near the site on the NSW south coast, for $76 million, freeing up around $200 million of working capital from “leftover” projects in its property division.
“This dividend decision is part of BlueScope’s established capital management framework and is independent of past or potential future offerings for the company,” it said in a statement Wednesday.
Last week, BlueScope rejected a $13.2 billion offer; This would result in a split of the group, with Australian assets going to SGH and US companies going to Steel Dynamics.
SGH and its partner have yet to formally respond to the rejection of the offer of $30 per share, which BlueScope said significantly undervalued its assets.
Market analysts have suggested that would-be predators will need to increase their offers if they want to return to the table.
The SGH/Steel Dynamics offer was made on December 12, but came to light on January 5 when it was revealed that Steel Dynamics had made three previous unsuccessful attempts to gain control of BlueScope.
“This special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders,” said CEO Mark Vassella.
“With a clear view towards the completion of our existing significant capital investment programme, BlueScope is positioned to not only return to the strong cash generation for which it is known, but to further reinforce this with the growing earnings of the business.”
The special dividend has not been announced and will be paid on February 24, after BlueScope reports first half results on February 16.
BlueScope shares closed Tuesday at $29.84, just below the hunters’ offer price.
