By Simon Evans
BlueScope Steel caught investors by surprise after it announced a special $438 million dividend just days after rejecting a $13.2 billion takeover offer lobbed by the Stokes family-controlled industrial conglomerate SGH Limited and its American bidding partner Steel Dynamics.
The country’s largest steelmaker said the special payment of $1 per share to be paid on February 24 was not designed to keep shareholders happy after last week’s rejection. Instead, the company said it had surplus cash after the $167 million sale of its stake in Tata BlueScope, a $76 million land sale near Sydney and about $200 million released from the real estate division.
But fund managers whose firms own BlueScope shares said there was no doubt that the special dividend, which was not expected, was gamesmanship as SGH and Steel Dynamics consider their next move.
SGH and Steel Dynamics want to split BlueScope into two, with the Nasdaq-listed producer to control a sprawling North American business that includes the flagship North Star mill in Ohio near its own operations in Indiana.
The bid is the fourth made by Steel Dynamics over the last two years. It is the first that includes SGH, which would keep the Australian arm.
Milford’s Cassidy said the special dividend’s timing had been a surprise, ahead of the first half results next month, when this type of announcement is usually made. “It’s a bit of a surprise in the short term. Bringing it forward from the results is probably not unexpected as part of the defence.”
BlueScope chief executive Mark Vassella said that the bumper, one-off shareholder payday showed the strength of the company’s cash flows. “The special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders.”
SGH and Steel Dynamics consortium declined to comment.
In rejecting the bid, BlueScope described the offer as “not close to where the value” of the company is and put a $2.8 billion valuation on its portfolio of undeveloped land. SGH had acquired another industrial business, the building materials group Boral, and intends to sell thousands of hectares of land.
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