Breaking News: BlueScope Steel shares were down 2% in trading early on Thursday morning, January 8, ahead of a widely expected rejection of the huge $13. 87 billion takeover offer. The bid, which was led by the Australian industrial group SGH and the American steel company Steel Dynamics, was rebuffed by the board as an attempt to snatch up the iconic steel maker “on the cheap.”
But with the official “no,” the company’s stock closed at $29.27, not far from a $30-a-share cash offer. That’s an indication that many investors think the fight isn’t over and a better offer might one day materialize. The board was resolute in its rejection, but the stock market is indicating there is a good likelihood of a deal if it can be done at an appropriate price.
BlueScope Chair Says Bid a “Very Significant Undervaluation of Assets”
BlueScope’s chairman, Jane McAloon, did not mince words when responding to the proposal. The $30 per share offer does not properly value the company’s world-class assets and its significant growth prospects, she said. The board voted unanimously that the bid was “highly opportunistic,” particularly in the context of global steel prices, which have weakened beyond their normal range.
The timing was among the board’s greatest frustrations. They said current market conditions, industry jargon refers to them as “steel spreads”, are currently low, which is causing the company to look less profitable than it really is. BlueScope says its profit will soar by up to $900 million when these market conditions return back to normal historical averages.
In addition to the price, the board was also concerned about how the deal was structured. SGH and Steel Dynamics had planned to tap BlueScope’s own fortuitously healthy balance sheet to help finance the debt required for the takeover. The board believed that was unfair to existing shareholders, who would face a long wait while the deal closed and no longer collect future dividend payments.
A Struggle for the Dominance of North American Steel
This most recent development marks the fourth attempt in two years by the American partner, Steel Dynamics, to acquire BlueScope’s operations in the United States. In the proposal, Kerry Stokes’ SGH would have kept the Australian and Asian businesses while Steel Dynamics would have retained the lucrative North American parts of the business.
Macquarie bank analysts think this takeover tussle has further to run. They argue that bidders almost certainly will come back with a revised offer given that BlueScope in the U.S. has become a “must-have” asset. That much more so now that fresh U.S. tariffs have made it a lot more advantageous for companies to own steel mills located squarely within North America.
Right now, BlueScope is focused on achieving its own plan to lift annual earnings by $500 million by 2030. The company also drew attention to “hidden treasure” in the 1,200 hectares of land it owns in Australia which was completely ignored by the takeover. Battle Royal As the 2026 trading year gets under way, everyone will be watching SGH and Steel Dynamics to see if they will dig even deeper into their wallets to win over the board.
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