Bluescope Steel (BSL AU): Kerry Stokes-Backed SGH's NBIO Needs More Gruel

• This morning (6th Jan), SGH Limited (SGH AU) and Steel Dynamics (STLD US) (SDI) confirmed they have submitted an NBIO for Bluescope Steel (BSL AU), Australia’s largest steel manufacturer.

• The Kerry Stokes-backed SGH and SDI are offering A$30/share, a 27% premium to undisturbed. And ~18.6x and 9.5x FY25 EV/EBIT and FY25 EV/EBITDA.

• Regulatory clearance should include FIRB and (perhaps) ACCC. SGH’s entrance should smooth over these conditions.

The Trade:

• Terms are below last year’s indicative Offer from SDI - which was rejected.

• SDI has now tabled four Offers; but this one has SGH in its corner to satisfy reg approvals. A sticking point in prior NBIOs.

• This NBIO needs a decent bump - >10% - for Bluescope to engage.

• BlueScope has zero net debt. By all accounts, its USA ops are undervalued.

• Trading 3.4% adrift of indicative terms.

• I would not aggressively chase it here.