BlueScope Steel rejects $9 billion takeover offer

BlueScope Steel is rejecting an $A$13.2 billion ($8.92 billion) buyout bid from SGH and U.S.-based Steel Dynamics, the Australian steelmaker said on Wednesday, and accused the bidders of trying to buy it "on the cheap".

BlueScope shares closed 1.12% higher on Wednesday at A$29.87, just below the A$30 per share offer made public on Monday.

The BlueScope board said the offer, which was the fourth approach from Steel Dynamics to the Melbourne-headquartered company since late 2024, 'very significantly' undervalued the company.

BLUESCOPE SAYS NO FOR THE FOURTH TIME

"Let me be clear - this proposal was an attempt to take BlueScope from its shareholders on the cheap," BlueScope Chair Jane McAloon said.

"This is the fourth time we've said no, and the answer remained the same - BlueScope is worth considerably more than what was on the table."

SGH and Steel Dynamics did not immediately respond to a request for comment outside Australian and U.S. business hours.

In a statement, BlueScope said the bid would be adjusted for future dividend payments and take a long time to be finalised, which would reduce the $A30 per share offer.

It also said while the bid was funded by debt and BlueScope had "virtually" no net debt last year, "the bidders are seeking to use BlueScope’s balance sheet to help fund their opportunistic takeover proposal."

Under the terms of the deal, SGH, controlled by Australian billionaire Kerry Stokes, would buy BlueScope and then offload the steelmaker's North American assets to Steel Dynamics.

Although the BlueScope shares are trading close to the offer price, implying the market expects the deal to proceed, some investors said even before the deal's rejection, the price needed to be higher to secure their support.

"It's good that there's some interest in BlueScope, the underlying thought from us and looking at the valuations is it's not enough," said Jamie Hannah, deputy head of investments at VanEck, a BlueScope and SGH investor.

"I think the way everything's going, they're going to have to increase the offer if they want to get any of the shareholders over the line."

AustralianSuper, BlueScope's largest investor with a 12.5% stake, declined to comment. Its backing could be decisive, as Australian pension funds often play an active role in corporate transactions.

AustralianSuper scuttled Brookfield's $10.6 billion bid for Origin Energy in 2023 after it said the offer undervalued the Australian energy firm.