BlueScope weighs $13b carve-up bid from Stokes and US firm

Billionaire Kerry Stokes’ business conglomerate, SGH Limited, has joined forces with US steelmaker Steel Dynamics to launch a bid for Australia’s biggest steelmaker, BlueScope, in a proposed $13 billion megadeal.

BlueScope late on Monday confirmed that in mid-December it received an unsolicited indicative takeover proposal from the two companies at a price of $30 cash per share. The deal would see SGH acquire all of BlueScope’s shares and then on-sell its North American businesses to Indiana-based Steel Dynamics.

The offer values BlueScope at 24 per cent above its sharemarket value at the start of this week. The stock rose 20.6 per cent on Tuesday to $29.48 following confirmation of the bid.

“The board of BlueScope, together with management and advisers, is considering and evaluating the indicative proposal,” the steelmaker said in a statement to the ASX. It noted that the offer was subject to several conditions, including “highly conditional debt funding support,” a close assessment of its books by the bidders, a unanimous backing from the BlueScope board and approval of its shareholders, which would be asked to vote on the scheme of arrangement deal.

The Australian steel giant also confirmed it had rebuffed three separate takeover approaches involving Steel Dynamics since late 2024 as the US steelmaker was eyeing BlueScope’s North American operations.

“These approaches were rejected as they significantly undervalued BlueScope and its future prospects, and presented significant execution risk in relation to regulatory outcomes,” the board said in its statement.

Stokes’ business conglomerate would add BlueScope’s local and Asia-Pacific operations to its businesses, which include Caterpillar dealer WesTrac, industrial equipment hire company Coates, building products maker Boral as well as part of gas exploration company Beach and television and publishing group Seven West Media. The company is 50.9 per cent owned by the Stokes family, with Kerry’s son Ryan Stokes running it as chief executive.

SGH and Steel Dynamics also confirmed the offer in a statement Tuesday morning.

“We believe BlueScope’s Australian business is a strong strategic fit for SGH,” Ryan Stokes said in the statement. “We intend to leverage our disciplined operating model and capital allocation approach to deliver better outcomes for stakeholders.”

BlueScope’s North American operations generate almost half of its sales, according to its latest annual report. It owns the North Star steel mill in Ohio, about 125 kilometres from a Steel Dynamics-owned operation, as well as a building products business.

“This transaction is not a surprise — North American steel mills have eyed BlueScope’s North Star mill in Ohio as an attractive asset for a while,” analysts at Citigroup wrote in a note last night. “The challenge was separating the North American assets from the rest of the company.”

Analyst Esther Holloway from Morningstar told this masthead that while SGH’s offer looked good, BlueScope’s board would likely have wanted a higher price per share.

“The offer price is quite a bit better than my fair value estimate. On paper that looks like a very good deal,” she said.

“But the fact that the company [BlueScope] hasn’t rushed to announce the bid gives me an impression that they’re not thrilled.”

The SGH bid has implications for the future of the ailing Whyalla steelworks in South Australia, put into administration last year by its previous owner, billionaire British businessman Sanjeev Gupta, and currently propped up by a $2.4 billion bailout package from the state and federal governments.

Last August, BlueScope joined forces with a consortium of Japanese, Indian and Korean steel companies to launch a bid for Whyalla, and it remains the presumptive frontrunner to acquire the asset off administrators KordaMentha.

It’s too early to say what SGH’s bid means for Whyalla’s future, sources close to the proposed merger said. SGH has previously taken an interest in the steelworks, with Ryan Stokes and chief financial officer Richard Richards visiting the site last year.

Stokes’ bid also comes in the midst of BlueScope’s own planned succession. The steel manufacturers’ chief executive Mark Vassella is retiring after eight years in the job, with his replacement, Tania Archibald, set to commence on February 1.

SGH’s share price rose 4.5 per cent on Tuesday. Steel Dynamics shares dropped as much as 3 per cent in New York overnight.

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