SGH & Steel Dynamics’ A$13.2B BlueScope Bid Rejected: What’s Next in Valuation Tug-of-War

On December 12, 2025, SGH and Steel Dynamics submitted a non-binding indicative all-cash offer to acquire 100% of BlueScope Steel at A$30 per share, for a total equity valuation of approximately A$13.15-13.2 billion (US$8.8-9 billion). Under the terms, SGH would acquire all shares and then sell BlueScope’s North American operations (including the North Star mill, scrap & coated/building products) to Steel Dynamics; SGH would retain Australia, Asia, NZ and Pacific operations. The offer includes several conditions: due diligence, regulatory approvals, exclusivity, and that dividends paid after 12 December 2025 will reduce the cash price.

BlueScope’s board unanimously rejected the offer shortly after, declaring it significantly undervalued the company. Key points of contention include:

• The exclusion by the offer of projected earnings improvements—expected $400-900 million additional EBIT if historical steel spreads and FX rates return—alongside initiatives already underway including a A$2.3 billion capital program, cost and productivity improvements, and land monetisation such as its 1,200-hectare portfolio with estimated upside of up to A$2.8 billion once rezoned.
• That the proposal’s structure gives “all upside value” to the acquirers, especially via potential future dividends, while offering less than A$30 effectively after adjustment.
• BlueScope’s near debt-free balance sheet, high prior returns (18% ROC since FY2017), and diversified geography and product mix are cited as undervalued by the proposal.

Strategic implications are several:

• The bid underscores Steel Dynamics’ intent to accelerate its U.S. footprint, targeting steel assets whose value is boosted by U.S. tariffs and favorable domestic demand. The North Star mill is of particular strategic interest to close geographic and supply chain synergies.
• For SGH, acquiring BlueScope’s Australian and Asia operations offers opportunities to build scale in coating, building steel products, industrial services, and extracting value from non-operational land.
• BlueScope’s board is signalling confidence in its internal strategy under incoming CEO Tania Archibald (assumes role February 1, 2026), projecting significant value creation without a sale—raising the potential cost for an acquirer needing to offer a materially higher bid.
• Analysts indicate the offer is priced at about 18.6× EV/FY25A EBIT and 9.5× EV/EBITDA, which may not sufficiently cover cost of capital or investor expectations—setting benchmarks for any revised offer.

Open issues and likely next steps include:

• Will SGH and Steel Dynamics raise their offer, especially on per-share cash, to win support of large institutional shareholders like AustralianSuper, and to justify splitting assets without damaging value?
• How will regulatory scrutiny unfold, in Australia (for divestiture, competition, foreign ownership), and the U.S. (for Steel Dynamics’ acquisition of BlueScope U.S. operations)?
• What might alternative bidders or counteroffers emerge—could BlueScope pursue strategic partners or alternative transactions?
• Valuation assumptions: forecasts for steel spreads, foreign exchange, and cost of capital will be central to determining if the midpoint of BlueScope’s asserted value ($35-$40/share) is achievable.