SGH (ASX:SGH) CEO Ryan Stokes has begun lobbying BlueScope Steel’s (ASX:BSL) largest shareholders to support a $13 billion takeover proposal that brokers and fund managers say is unlikely to succeed unless it is lifted to more than $15 billion, potentially triggering a broader bidding contest for the steelmaker.
SGH confirmed it had approached BlueScope with a plan, alongside US-based Steel Dynamics, to acquire the company and split its Australian and North American operations, arguing the businesses no longer made strategic sense together.
BlueScope later disclosed it had received a $30-a-share offer, a near 27% premium to its pre-bid price, but noted it followed several rejected approaches from Steel Dynamics over the past two years that it said undervalued the company and carried regulatory risk.
Market analysts and investors said the bid appeared to be an opening move, with valuations likely needing to reach the mid-$30 per share range given BlueScope's recovering earnings, valuable US assets and surplus property.
Some suggested global steelmakers such as Japan’s Nippon Steel, South Korea’s POSCO or India's JSW Steel could emerge as rival suitors, turning the proposal into an auction.
Stokes has told investors the deal would allow cost cuts and growth in Australia by removing the distraction of the US division, while Steel Dynamics has described BlueScope's American assets as a strong strategic fit.
The bid has also raised questions about the future sale of the Whyalla steelworks, though South Australian Premier Peter Malinauskas said the process would continue.