BlueScope Says $11 Billion Steel Dynamics, SGH Takeover Offer Insufficient
BlueScope Chair Jane McAloon says the board is open to further engagement
- BlueScope Steel said a revised US$11 billion takeover offer from Steel Dynamics and SGH isn’t sufficient, but is open to further talks.
- BlueScope cited insufficient value and onerous conditions as reasons for not recommending the proposal to shareholders.
- The offer structure involves SGH acquiring BlueScope’s assets and selling North American businesses to Steel Dynamics.
BlueScope BSL -2.64%decrease; red down pointing triangle Steel said a revised takeover offer from U.S. steelmaker Steel Dynamics STLD 0.35%increase; green up pointing triangle and Australian conglomerate SGH isn’t sufficient for directors to recommend a deal to shareholders, but that it is open to talks if the companies are able to address some of its concerns.
Last week, Steel Dynamics and SGH submitted a sweetened offer for Australia’s BlueScope that values its equity at roughly US$11 billion, and said they wouldn’t raise it again unless a rival bidder emerges.
The proposal intensified a takeover campaign by Indiana-based Steel Dynamics, which has been involved in five bids for BlueScope since late 2024. BlueScope owns a steel mill in Delta, Ohio, which Steel Dynamics covets at a time when demand for locally produced steel in the U.S. is being stoked by tariffs on imports.
Under the offer, SGH would acquire all of BlueScope’s assets and then sell the North American businesses to Steel Dynamics.
“The revised proposal does not adequately address our valuation concerns,” BlueScope Chair Jane McAloon said in a letter addressed to the chief executives of Steel Dynamics and SGH on Thursday. “Consequently, the offer price is not sufficient for the board to recommend a scheme of arrangement to its shareholders.”
She said the board is open to further engagement, including providing some due diligence information, if Steel Dynamics and SGH address several issues. That includes, “importantly, increasing the value of your proposal for all BlueScope shareholders,” she said.
In the letter, McAloon questioned the structure of the offer price and how the suitors value BlueScope’s North America business versus its operations elsewhere.
She also raised concerns about conditions attached to the revised proposal that she described as onerous—including exclusivity—and asked for more information about how the takeover would be funded.
“Notwithstanding your ‘best and final’ statement, we consider that there are various ways to increase the value that BlueScope shareholders could receive,” she said. BlueScope remains open to finding a deal, McAloon said.
Spokespeople for Steel Dynamics and SGH declined to comment. Shares in BlueScope were roughly 3.5% lower by early afternoon in Sydney.
The companies submitted a roughly US$8.8 billion takeover offer for BlueScope in December that was rejected by BlueScope directors last month.
Last week, they made a revised offer under which BlueScope shareholders would receive 32.35 Australian dollars, equivalent to about US$22.84, per share in cash. The offer equates to A$34.00 a share before payment of an interim and special dividend recently announced by BlueScope. It represents a total equity value of A$15 billion.
Since rejecting the pair’s earlier bid, BlueScope’s chief executive has outlined plans to make cost savings and boost shareholder returns. The company recently reported a more than doubling in first-half net profit and said it would increase dividend payments.
BlueScope owns the North Star steel mill in Ohio, which it said in 2024 accounted for roughly 4% of U.S. production of hot-rolled coil. The company has significantly expanded the operation since Trump imposed a 25% tariff on foreign-made steel in 2018. That tariff was doubled to 50% last year.
Steel Dynamics and SGH previously said that BlueScope’s North American operations aren’t strategically compatible with its other businesses “and would benefit as stand-alone businesses under new ownership.”
SGH would retain BlueScope’s operations outside of North America, including its Australian steel products, Asia coated products, and New Zealand and Pacific Islands businesses. That includes Australia’s largest steelworks, located south of Sydney.
McAloon said she has twice requested details on how the companies are valuing the North American operations, but hasn’t been provided that information.
“It is evident that an on-sale price has been agreed,” she said. “It is important for the board to understand this value attribution.”
In late 2024, BlueScope rebuffed two separate proposals made jointly by Steel Dynamics and Alan Kestenbaum’s Bedrock Industries.
Last year, Steel Dynamics proposed buying all of BlueScope. It intended to keep the North American operations and distribute the other assets to BlueScope shareholders—a proposal that BlueScope directors also rejected.