SGH says BlueScope’s Australian and North American businesses better off with separate owners

SGH is arguing that BlueScope’s Australian and North American businesses are incompatible, urging shareholders in the country’s biggest steel-maker to back a break-up through a $13.2 billion joint takeover bid.

BlueScope is evaluating an indicative $30-a-share cash offer by SGH and US group Steel Dynamics submitted three weeks ago that would see the Australian group split between the bidding partners.

SGH, which is majority owned by Kerry Stokes’ family companies, said on Tuesday that BlueScope’s Australian and North American businesses were “not strategically compatible and would benefit as stand-alone businesses under new ownership”.

Under their plan, SGH would buy BlueScope before on-selling the target’s North American steel business to Steel Dynamics’, the continent’s biggest metals recycler and fourth largest steel producer. SGH would retain the Australian operations, principally the Port Kembla steelworks in NSW.

It is Steel Dynamics’ fourth tilt at BlueScope, with three previous undisclosed approaches since 2024 having been rejected by the BlueScope board.

By teaming up with SGH this time, however, the US steelmaker potentially avoids any pushback from the Foreign Investment Review Board and the Federal Government amid concerns about the loss of Australian sovereign manufacturing in strategically important industries.

BlueScope’s North Star business in the US accounts for less than half of its parent’s near $6b in annual turnover, but it is the group’s biggest earner and has become an increasingly particularly attractive buyout target since US President Donald Trump last year imposed steep tariffs on steel to protect US producers.

A successful bid would combine the Australian steel businesses with SGH’s WesTrac Caterpillar heavy equipment franchise, the Boral building materials network and the Coates industrial hire business.

SGH chief executive Ryan Stokes suggested on Tuesday that both the Australian and North American steel businesses would fare better under separate owners, citing SGH’s track record of driving better returns from its Australian businesses.

“We believe BlueScope’s Australian business is a strong strategic fit for SGH and we have a proven track record of driving performance improvement in domestic industrial businesses,” Mr Stokes said.

SGH argues there are “substantial benefits to all BSL stakeholders from a strategic combination of BSL’s North American business with Steel Dynamics, and the creation of a standalone” business straddling the remainder of BlueScope.

North Star is anchored by a steel mill in Ohio, about 130km from a Steel Dynamics-owned operation, that serves the US automotive and construction industries.

“The acquisition of BlueScope’s North American Assets will be highly complementary to our existing operations and further expands our capabilities domestically,” Steel Dynamics chief executive Mark Millett said.

“The combination of BSL’s North American teams and assets with Steel Dynamics would be an excellent fit in every sense and create value for all stakeholders.”

BlueScope shares leapt to match the bid proposal when trading resumed on Tuesday, up 21 per cent at an 18-year high of $29.54.

According to the bidders, the proposed offer was pitched at a 33 per cent premium to BlueScope’s three-month volume-weighted share price.

Confirming the approach late on Monday, BlueScope revealed that it had fielded three previous buyout proposals from Steel Dynamics-led consortiums since 2024, including two priced at $24 and $29 a share.

The last offer, in early 2025, involved Steel Dynamics acquiring all of BlueScope, retaining its North American operations, but spinning off the balance of the group to BlueScope shareholders.

That proposal valued North Star at $24 a share and the remaining assets at a minimum $9 a share, for a total of $33 a share.

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

However, the final $33-a-share proposal could provide a reference point for the BlueScope board as it potentially looks to squeeze the joint bidders for more.

BlueScope says its directors are evaluating the new offer but also taking account of what value the group expects to add under its current growth plans.

It was “committed to optimising value for its shareholders across all of its businesses, and continues to regularly assess all options to accelerate realisation of this value”.

SGH shares closed 4.5 per cent higher at $48.60.

The group’s other interests include a 20 per cent stake in Southern Cross Media, which now owns West Australian Newspapers Holdings, the publisher of thewest.com.au and The West Australian, after a merger with Seven West Media.