- SGH and Steel Dynamics made a non-binding all-cash A$30-per-share bid for BlueScope Steel, valuing it at about A$13.15–13.2 billion (US$8.8–8.9 billion) and roughly a 27% premium.
- BlueScope’s board unanimously rejected the offer as “very significantly undervalued,” citing deferred-dividend adjustments, a long timetable, and the bidders’ plan to use BlueScope’s low-debt balance sheet to help fund the deal.
- The proposal would have SGH buy all of BlueScope and then sell the North American business (including North Star) to Steel Dynamics, with SGH retaining the Australia/Asia-Pacific operations.
- BlueScope argues its standalone value is higher due to a growth and cost-savings pipeline, land value estimated around A$2.8 billion, and potential A$400–900 million EBIT upside if spreads and FX normalize.
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The proposed bid from SGH & Steel Dynamics puts a strong spotlight on the tension between immediate deal value and long‐term value creation. While the A$30/share all-cash offer represents a healthy premium, BlueScope’s leadership believes it fails to capture several strategic assets and foreseeable EBIT upside. The board’s rejection underscores concerns over both valuation and structure.
From a financial perspective, the bid values BlueScope at approximately A$13.15–13.2 billion (≈US$8.78–8.9 billion), with the share price premium measured against recent closing and VWAPs. But the offer carries offsets: the share price would be reduced by any dividends after December 12, 2025, and the long implementation timeline erodes the effective value to shareholders.
Strategically, splitting the business geographically allows Steel Dynamics to acquire a strong U.S. footprint (including the North Star mill), which aligns with U.S. industrial policy and tariff protections. Meanwhile, SGH aims to integrate Australia and Asia operations with its industrial holdings. BlueScope raises material concerns over execution risks, regulatory approvals, and whether the separation undervalues synergies across its global business.
BlueScope emphasizes its own value drivers: 1) ongoing growth capex (A$2.3B) with targeted annual earnings uplift of A$500 million; 2) cost and productivity improvements (A$200 million in FY2026); 3) land monetisation—1,200 hectares, valuations at A$2.8B based on recent West Dapto sale; 4) substantial EBIT upside (A$400–900M) if market and FX recover; 5) proven ROIC (~18%) and dividends/share buy-backs totalling A$3.8B since 2017. These factors create a credible case that intrinsic value may be materially higher—possibly requiring an offer in mid-A$30s per share to satisfy shareholders.
Open questions include the degree to which regulatory approvals (both in Australia and U.S.) might become obstacles; whether bidders will increase the offer considering investor pressure (including from major institutional shareholders like AustralianSuper); the timeline and feasibility of splitting operational units; impact on employees, supply contracts and brand; and how cyclical risks in steel markets and FX will affect projected returns.
If the premium were increased meaningfully, or value reallocated to account for undervalued growth, the bid might gain traction. Otherwise, BlueScope may remain independent, driven by its internal strategy and rising expectations.
Supporting Notes
- SGH and Steel Dynamics submitted a non-binding indicative offer on 12 December 2025 for A$30 cash per BlueScope share, valuing the company at ~A$13.15–13.2 billion (USD ~8.78–8.9 billion) with SGH acquiring all shares and offloading North American operations to Steel Dynamics.
- Offer equates to a ~27% premium over BlueScope’s closing share price on 11 December 2025; premium also vs 3-month VWAP, 52-week VWAP; valued at ~18.6× EV/FY25 EBIT and ~9.5× EV/FY25 EBITDA.
- BlueScope’s board unanimously rejected the offer, asserting it “very significantly undervalued” the company, undermined by deferred dividends, long timetable, and undervalued growth and asset base.
- BlueScope’s internal value metrics: A$2.3B investment program; annual earnings uplift targeted A$500M; cost/productivity initiatives expected to deliver A$200M in FY2026; potential A$400-900M EBIT upside if spreads and FX improve.
- Land portfolio: 1,200 hectare non-operational land, rezoned and sale of West Dapto implies value ~A$2.8B.
- Since FY2017 BlueScope has invested A$3.7B in growth, returned A$3.8B to shareholders via dividends and buybacks, achieved ~18% average return on invested capital.
- The offer is subject to conditions: due diligence, exclusivity, unanimous board recommendation, shareholder & regulatory approvals, adjustment for dividends after 12 Dec 2025, and SGH and SDI acquiring via scheme of arrangement.
- Concerns raised about regulatory and execution risk, and SGH’s use of BlueScope’s balance sheet to help fund takeover despite BlueScope having “virtually no net debt.”