Seven Group chief Ryan Stokes may be in the trenches with a third nipper, but back at the office, his problem child awaits.
Stokes, who doubles as Boral’s chairman, oversees a whopping 71.6 per cent stake in the cement maker, most of which Seven sucked up in a hostile off-market takeover play.
Part of his headache is Boral’s value relative to its peers. The $5.9 billion company trades on a 37.48 price-to-earnings ratio. This compares to Washington H Soul Pattinson-backed Brickworks at a P/E of 10.6, building products manufacturer/supplier CSR at 16 and Adbri at 19.25.
There’s also limited liquidity in the stock, which has a free float of just 28.3 per cent. Aside from Seven, Macquarie Group holds 6.7 per cent of the company, having sold down from 8 per cent earlier this month.
All this adds up to hopes – or perhaps, wishful thinking from equity capital markets teams with IPOs on the fritz – of a big Boral block in the works. The stock has shot up 57 per cent over the past year (see chart below), and with the turnaround on track, it could be a good time to pitch to fundies.
Seven has already shown some willingness to move Boral stock. The company called UBS’s equities desk to shop up to 3 per cent of its stake in August. After offering Boral’s shares at 4.90 a piece – or a 2.6 per cent discount to the last close – UBS fixed the offer size at 11.1 million shares or about 1 per cent of the company.
However, working out what Stokes is going to do next is tricky business, and he doesn’t have a strong record of selling out of his big bets. Case in point is Beach Energy, which Seven nabbed 13.8 per cent of in 2015 and has built its stake up to 30 per cent. The question is how much of Boral does Seven want to control in the long run.
Read the full story tomorrow and more on the Street Talk page.
New-look Greenhill eyes local expansion after Mizuho deal, Aaron Weinman writes.Perseus stokes $258m gold bidding war, Peter Ker writes.Wall Street banks are trying to get back leverage financial deals that have been lost to private credit, Bloomberg reports.