BlueScope Steel (ASX:BSL) has rebuffed a $13.2 billion takeover proposal from Stokes family–controlled SGH and its US partner, Steel Dynamics (NASDAQ:STLD), declaring the approach opportunistic and significantly undervaluing Australia’s largest steelmaker.
The board said the indicative offer of $30 per share failed to reflect BlueScope’s world-class assets, earnings recovery and future growth prospects, marking the fourth time it has rejected an advance from the consortium.
Chairwoman Jane McAloon said the board would not allow shareholders to be "taken on the cheap", arguing the proposal overlooked the company’s momentum and strategic value.
The bid prompted analysts and some investors to suggest a price closer to $35 per share would better capture BlueScope's improving earnings outlook and substantial land holdings.
In a detailed rejection letter, the company warned the offer would likely be worth less by completion and was subject to multiple conditions, including exclusive due diligence and debt financing.
BlueScope said its earnings before interest and tax could lift by between $400 million and $900 million annually if Asian steel spreads and exchange rates returned to historical averages.
The board cited a $2.3 billion capital expenditure program expected to boost free cash flow, a targeted $500 million uplift in earnings from growth initiatives, $200 million in cost and productivity gains this financial year, and a 1200-hectare land portfolio as key reasons for rejecting the bid.
It also criticised the consortium's plan to debt-fund the acquisition despite BlueScope having minimal net debt.
SGH managing director Ryan Stokes has since pitched directly to shareholders, arguing the company could cut domestic costs and refocus by reducing its US exposure, while highlighting Steel Dynamics’ regulatory and financing strengths.