- BlueScope Steel’s board unanimously rejected a A$30/share (A$13.2B, ~US$8.8B) takeover bid from a SGH–Steel Dynamics consortium as materially undervaluing the company.
- The proposal would have SGH buy all of BlueScope, then immediately divest the North American business to Steel Dynamics while SGH kept Australia/Asia-Pacific operations.
- BlueScope cited dividend and timing adjustments, execution and financing risk, and undervaluation of non-U.S. assets and future improvement potential as key flaws in the offer.
- Management says its standalone plan—capex, productivity gains and land monetisation—plus a cyclical steel/FX rebound could deliver materially higher earnings and value.
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BlueScope’s decision to reject the consortium’s offer underscores a fundamental valuation gap between what the bidders are willing to pay and what the board believes to be the intrinsic value of the company. At A$30 per share—while representing a 26.8-27% premium over its share price before the bid—the price fails to duly compensate for dividend payout loss, the time and risk involved in execution, and the strategic value of BlueScope’s non-North American operations. The proposed deal structure, which splits the company along geography, amplifies these concerns, especially given that the bid undervalues BlueScope’s robust operations in Australia, Asia, Pacific, and New Zealand.
From SGH’s perspective, acquiring BlueScope’s entire business and selling the North American assets to Steel Dynamics could unlock value if SGH can effectively manage the remaining global operations and monetise land holdings. SJGH’s valuation would rest heavily on property re-development potential (notably a 1,200-hectare land portfolio possibly worth A$2.8 billion) and on operational improvements across its Asia-Pacific operations.
Steel Dynamics’ motivation is more straightforward: acquiring BlueScope’s North Star mill and associated Coated Products businesses bolsters its U.S. footprint in flat steel, benefitting from protective tariffs and opportunity to exploit cost synergies and scale. However, the North American operations have seen EBIT drop about 45% YoY, notably in FY 2025, which tempers near-term upside.
Strategically, BlueScope’s board appears confident that its long-term plan—capital projects, cost savings, land monetisation, and cyclical recovery—can deliver a superior path to value creation versus an immediate cash out via the current bid. Yet, key open questions remain: how SGH might integrate and manage BlueScope’s international businesses; the regulatory, tax, and competition risks in splitting up its operations; and whether a superior rival bid might emerge. Moreover, the execution risks tied to commodity-cyclical volatility and FX fluctuation, especially impacting steel spreads, are material variables.
Supporting Notes
- The takeover proposal valued BlueScope at A$30/share in cash, equating to A$13.14-13.2 billion (≈US$8.8-8.9 billion); SGH would acquire all shares, then sell its North American operations to Steel Dynamics.
- BlueScope’s board unanimously rejected the proposal as “very significantly undervaluing” the company, noting dilution of value via dividend adjustments and the concentrated benefit to bidders.
- The North American segment represents ~45% of BlueScope’s revenue (FY 2025), employing ~4,700 people across five business units; but it saw a 45% drop in EBIT year-over-year in FY 2025.
- BlueScope forecasts upside: A$400-900 million additional EBIT if steel spreads and FX revert to historical norms; cost and productivity savings (A$200 million in FY 2026), growth capex completion (A$2.3 billion program), and land portfolio monetisation (1,200 hectares, possibly A$2.8 billion value) are key components of its long-term plan.
- Previous offers from Steel Dynamics-led consortiums (late 2024 via A$27.50 then A$29.00/s-share; early 2025 with split valuation of A$24 for NA assets, A$9 for rest) were also rejected for undervaluation and execution risk.
- The proposed deal is conditional on due diligence, regulatory approvals, and debt funding; BlueScope had near-zero net debt in FY 2025, raising concern about the bidders’ leverage and use of its balance sheet.