BlueScope Steel has surged +42% this year helped by a $32.25 joint takeover bid from SGH (Seven Group Holdings) and US steelmaker Steel Dynamics – a rare rebuff that has so far benefited shareholders. Interestingly, SGH recently announced a $500 million buyback, demonstrating capital discipline, and while we’re sure they remain very interested in BSL, their “Best & Final” offer may just be that.
BSL is now trading on the rich side, which is no surprise following the SGH bid, but all else being equal it feels fully priced in the short term at current levels unless M&A activity returns.
- We like BSL, but the risk/reward isn’t exciting around $33, although we couldn’t be short with SGH circling.
MM is neutral towards BSL around $33
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