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ASA concerned shareholders have no say in significant acquisitions

MEDIA RELEASE: 25 November 2016

The Australian Shareholders’ Association (ASA) today expressed concern about the Boral acquisition of US company Headwaters Inc, which does not appear to require approval by Boral shareholders although Headwaters shareholder approval will be sought.

Boral completed a $450 million institutional placement and is conducting a $1.6 billion pro-rata accelerated institutional tradeable rights entitlements offer (PAITREO) to partly fund the acquisition. While ASA is pleased to see Boral using the PAITREO structure, ASA believes that given the funds raised will dilute existing shareholders, Boral shareholders should get a vote.

ASA Chairman Diana D’Ambra said, “Whilst we encourage boards to take measured risks, the acquisition is worth over 75% of Boral’s market capitalisation as at last Friday and the capital to be raised represents almost 45% of its existing share capital. This is undoubtedly a significant change to the scale of Boral’s activities so it is not clear why shareholder approval is not being sought.”

Under ASX Listing Rule 11.1, ASX can require a company to seek shareholder approval for a significant change to the nature or scale of the company’s activities – in this context ASX uses a 25% benchmark. However, it is disappointing the rule is primarily used by ASX for back door listings.

Mrs D’Ambra said, “In the same way the ASA believes bidder shareholder approval should be required where a substantial amount of capital is issued as scrip consideration in a merger or takeover, we believe where a substantial amount of capital is issued to fund a large acquisition, shareholder approval should also be required.”

“Boral shareholders have seen the share price fall by almost 19% on day one of trade after announcement of the acquisition, yet they have no say in the matter,” said Mrs D’Ambra.

For more information please contact:

Media Liaison
02 9223 8811

The Australian Shareholders’ Association (ASA) is the only independent, member-funded, not-for- profit organisation that educates shareholders to become better investors and focuses on driving improvements in transparency and accountability of corporate behaviour in Australia.


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