Steel M&A gets a new cross-border bid

BlueScope received a A$13.2 billion all-cash proposal from SGH and Steel Dynamics, a 27% premium to its share price, and the company has previously rejected earlier offers from Steel Dynamics.

BlueScope Steel said it received an unsolicited, non-binding A$13.2 billion all-cash proposal from Australian conglomerate SGH and U.S. producer Steel Dynamics. The offer, disclosed in a filing, values the company at A$30 a share and was lodged in December before being made public in early January. Bidders have said they plan to split BlueScope's U.S. and non-U.S. operations. Analysts and LSEG data point out the bidders used BlueScope's financial year to the end of last June, which was a weaker period for the company, to frame the proposal. BlueScope has already rejected three separate proposals from Steel Dynamics since late 2024. Key details: - The proposal is for A$13.2 billion in equity value and is described as an all-cash, indicative offer at A$30 per share. - The bidders are SGH and Steel Dynamics and they propose to separate BlueScope's U.S. and non-U.S. assets. - The offer is presented at about 9.5 times EBITDA using BlueScope's year to June, a period that was not strong for the company. - LSEG data indicates using that 12-month period gives an implied return on investment near 4%, below a reported 9.5% cost of capital. - Analysts compiled by LSEG forecast BlueScope's EBIT to rise about 53% to more than A$1.1 billion this financial year, which would raise implied returns to roughly 6.5% and to about 8.5% by 2028 under current estimates. - BlueScope said it had rejected three prior offers from Steel Dynamics since late 2024, including one at A$29 a share; the stock rose around 20% to about A$29.55 on January 6. Summary: The unsolicited A$13.2 billion bid has drawn market attention and lifted BlueScope's share price while analysts note the offer implies low returns when using last fiscal year's figures. Undetermined at this time.