From Margin Call in today's "The Australian"There’ll be no need for introductions following what we hear is the likely appointment of investment bank Citi to assist Jarden in their defence of the Kathryn Fagg-chaired Boral from the clutches of Kerry Stokes and his Seven Group Holdings. Billionaire industrialist Stokes, who already owns 23 per cent of Boral, this week launched an $8bn bid for the building materials group, which Fagg’s board has already recommended shareholders reject. Margin Call hears that the banking teams led by Tony Osmond at Citi and Aiden Allen at Jarden have now signed on to assist Fagg, lining up against Barrenjoey, which is working for Stokes. Citi and Jarden are already in the door at Boral, conducting the group’s now-under-way share buyback, which started on April 19. As a notable aside, Jarden (with Macquarie Capital) underwrote Seven’s $500m capital raising in mid-April, so is already familiar with Boral’s aggressor. And could it be that we are already seeing some signs of the Citi/Jarden defence strategy, with Boral on Wednesday forking out $12.5m to buy back 1.9 million of its shares at up to $6.80-a-piece. Stokes has bid $6.50-a-share for Boral and has said Seven wants to increase its stake to about 30 per cent, which would move it close to effective control. Boral’s buyback started on April 19 and before Wednesday it had spent $66.8m on buying a total of 10.8 million shares, so that Wednesday’s single day of buying represented a rapid acceleration of what could be the $700m-plus buyback program. Forking out capital at that rate and at that sort of trading price would be an expensive way to keep Stokes at bay, as well as potentially playing into his hands by shrinking Boral’s issued capital and so boosting Seven’s stake in the group beyond its existing 23 per cent. And for that Stokes would not have to outlay a cent. That’s unlikely to please veteran investment banker and shareholder activist John Wylie, whose Tanarra Capital has 2.5 per cent of Boral. Wylie, along with substantial Boral shareholder Perpetual, has been critical of Boral’s board over its relations with Stokes and Seven and in particular the allocation of Boral board seats to the Perth businessman. Fagg has said she will leave the board this year, with Wylie keen for that to happen sooner rather than later. A ramped up buyback in the face of Stokes’ bid might just add fuel to his fire
News: BLD UPDATE 1-Australia's Boral recommends shareholders reject Seven Group bid, page-6
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