Shares of Australian steel manufacturer BlueScope Steel Ltd closed higher on Wednesday following confirmation the company is assessing a revised takeover proposal from a consortium. The stock finished the session at A$28.74, a gain of 2.6%.
Revised Offer Details
The company disclosed it received a non-binding and conditional proposal from SGH Ltd and U.S.-based Steel Dynamics Inc. The consortium offered A$32.35 per share in cash for the entire company. Under the proposed structure, SGH would acquire BlueScope and subsequently transfer its North American operations to Steel Dynamics.
Despite the share price increase, a significant gap remains between the trading price and the offer. The stock closed approximately 11% below the proposed cash price, a spread that typically reflects market skepticism regarding deal completion, valuation, or structural complexities.
Board Evaluation and Investor Guidance
BlueScope's board stated it is reviewing the revised offer in the context of the company's standalone value, execution risks, and the conditions attached to the proposal. The board explicitly advised shareholders that no action is currently required and emphasized there is no guarantee the discussions will result in a transaction.
Trading was volatile during the session, with the share price swinging between A$27.97 and A$29.67 before settling. The persistent discount to the offer price underscores the cautious stance of merger arbitrage traders heading into the next trading day.
Analyst Views and Strategic Context
Market analysts offered divergent perspectives on the likelihood of a deal. Joseph Koh of Blackwattle Investment Partners suggested there is a "more than 50% chance" the board will reject the offer again. Conversely, John Ayoub at Wilson Asset Management viewed the sweetened bid as potentially "good enough to get a deal done."
Analysts at RBC noted their mid-cycle valuation for BlueScope sits in the mid-A$30s range and indicated the raised bid may still fall short of the board's expectations. They highlighted the company's previously flagged land bank, valued at approximately A$2.8 billion, as a key asset. The strategic rationale involves SGH taking the Australian business while Steel Dynamics assumes control of the North American assets, a move complicated by existing U.S. tariffs on steel imports.
Strong Financial Performance and Capital Return
The takeover interest coincides with a period of robust financial performance for BlueScope. The company reported a first-half net profit after tax of A$391 million, with underlying earnings before interest and tax (EBIT) reaching A$558 million. This result was driven by wider steel spreads in the U.S., higher sales volumes, and disciplined cost management.
Management provided an optimistic outlook, forecasting underlying EBIT for the second half to be between A$620 million and A$700 million. For the 2026 calendar year, BlueScope outlined a substantial capital return program totaling A$3.00 per share, comprising a A$1.00 special dividend, a 65-cent interim dividend, and a A$310 million on-market share buyback. Chief Executive Tania Archibald characterized the results as a clear demonstration of the group's portfolio strength.
Potential Deal Hurdles and Upcoming Catalyst
Several obstacles could derail the proposal. Non-binding conditional offers are inherently uncertain and can falter during due diligence, from financing issues, or due to regulatory objections. The board may also determine the price is insufficient relative to the company's prospects. The break-up nature of the transaction introduces additional integration and separation complexities.
A near-term mechanical catalyst for traders is the upcoming dividend schedule. The stock will trade ex-dividend on February 20, with a record date of February 23 and payment scheduled for March 24.
As trading resumes, key questions loom. Market participants will watch to see if BlueScope advances the process by making a formal statement or granting due diligence access. There is also speculation about whether other potential bidders might emerge to challenge the consortium's proposal. All of this unfolds just before the stock's ex-dividend date this Friday.
