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So the battle is now on.
But the entire board, those aligned and non-aligned to Stokes, are equally apprised of Boral’s positive prospects. The building and construction companies such as Boral are on the cusp of a big boost to demand in housing and infrastructure as a lack of housing stock has reached critical levels and state and the federal governments are promising policies to address the shortfall.
Kerry Stokes’ $3 billion Boral move is not playing out as planned. Credit: Photo: Andrew Meares
Two of the other major construction and building materials suppliers, CSR and Adbri, are already the subject of offers.
In addition, Boral in particular is the object of a management-led business renovation led by Vik Bansal, whose human resources management record has been a touchy subject in previous companies but whose operational and financial results have been lauded.
Boral’s results in the first half of the 2024 financial year, under his stewardship, demonstrate that the company is getting its act together and earnings margins have reached double digits after years of underperformance.
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Boral says its outlook is robust and supported by tailwinds of positive industry fundamentals, the most significant of which is the abnormally high immigration levels.
Significantly, this will allow all the large construction and building materials companies to exercise better control over pricing.
In the past, the industry participants have opted for volume over pricing. But evidence is emerging that it now looks to be moving to a more “rational” market.
It is bad news for house builders or renovators, but good news for the companies such as Boral that supply the materials.
Building and construction companies are on the cusp of a big boost to demand in housing and infrastructure.Credit: Tamara Voninski
A report by the Urban Development Institute of Australia this week said that based on its forecasts, the industry would need to double its capacity and build 300,000 homes between 2026 and 2029 to meet the 1.2 million target set by the federal government.
For Boral’s minority shareholders, Stokes has strategically placed a minefield of grenades, so resisting his latest takeover offer carries risk.
If shareholders follow the recommendation of the independent directors and refuse to sell their shares, they could risk their shares being delisted (although this process is complicated) and they might have to say goodbye to dividends for a while.
Stokes hasn’t quite got Boral’s minority shareholders over a barrel but their future is certainly clouded under his control.
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