Why SWM is worth more than $1.50 per share, page-196

Some interesting observations in Seven Group's Bidders Statement for Boral and now Supplemental Statement that I think are relevant to SWM.

Of particular note is the comment today from Seven Group where it "reinforced .... that Boral was unlikely to pay dividends for some time”. This despite Boral running into a period of good financial performance! Similar playbook that they are already using for SWM and for mine, this signals that despite medium term prospects for SWM, they are unlikely to open up the dividend tap any time soon. Indeed, I see this hording of cash flow is a part of their strategy to pressure minorities into accepting Seven Group's terms (if/when they materialise).

Once they scoop up Boral, I believe it is only a matter of time before they decide to pick up SWM for cents in the $ as well. The value of the SWM cash flows are worth a lot more consolidated into Seven Group at their current multiples (trading at 7.5x EBITDA) than left languishing in an "orphaned" SWM (trading at <2.0x EBITDA) controlled by Seven Group. Whilst this control exists, SWM will remain heavily discounted by Mr Market.