Australia's Seven Group offers $1.2 billion for full control of Boral

By Scott Murdoch and Sameer Manekar

(Reuters) -Australian diversified investor Seven Group Holdings has offered A$1.9 billion ($1.24 billion) to take full control of building products group maker Boral in a bet Australia's infrastructure spending boom will be maintained in coming years.

Seven Group, headed by billionaire Kerry Stokes and his family, already owns nearly 72% of Boral, and the bid launched on Monday is designed to mop up the rest of the company.

The bid of a minimum of A$6.05 per Boral share consists of 0.1116 Seven Group shares and A$1.50 cash.

The deal would value Boral at A$6.67 billion ($4.35 billion and represent a 3.4% premium to Boral's last closing level of A$5.850.

In a statement, Seven Group said its offer was above any closing price Boral has traded at since 2007.

Boral has been reshaping it businesses in the past two years to increase its Australian building and industrial products group to take advantage of governments increasing their infrastructure spending programs. It sold down a number of overseas assets as it wound back its international divisions.

Boral shares rose 3.7% while Seven Group was down 1% in trading by early afternoon.

Boral in a separate statement recommended its shareholders take no action on the takeover offer, adding that an independent board committee had been established to review the offer.

Seven Group in 2021 made multiple takeover offers to acquire Boral, which it kept rejecting citing undervaluation of its business.

Seven Group ended up amassing around a 71% stake in just a few months in 2021 as record-low interest rates boosted Boral's domestic business, generating buyer interest.

Seven Group on Monday added it will raise its offer for Boral by another 10 Australian cents in the event it achieves an aggregate 80% stake in Boral or if Boral's board unanimously recommends the offer to its shareholders, or both.

The offer would increase by another 10 cents if Seven Group's stake reaches 90.6%, the compulsory acquisition threshold.

However, Seven Group said it would not buy Boral shares for an amount above A$6.25 apiece for at least a year after the offer closes.

($1 = 1.5321 Australian dollars)

(Reporting by Scott Murdoch in Sydney and Sameer Manekar in Bengaluru; Editing by Christopher Cushing Editing by Lisa Shumaker and Chris Reese)