It won’t be long before Kerry Stokes controls Boral. Arguably he already does

In each instance, Stokes has used creep provisions to avoid the need for an expensive takeover bid.

He has also been masterful at engineering the ownership structure of the companies in which he has investments – which in some instances has left minority shareholders unhappy.

The only wrinkle in Stokes’ ambitions for Boral is the existence of a number of large activist shareholders. To date they all appear to have been on the same page with Stokes about what is needed to revive Boral’s fortunes. But you have to wonder whether this peace is fragile.

If one follows this line of Stokes’ conventional strategy, it is fair to assume that Boral is no longer a takeover target. Surely this must be mighty annoying for some minority shareholders who had bought into the stock cheaply over the past year in the hope of a 30 per cent premium being offered by a takeover suitor.

For those who were punting on a strategic review of Boral’s businesses, a revamped board and new management as a means to unlock value, everything seems to be going to plan.

In every other respect Boral was a screaming target for astute value investors – a company with a list of good assets but whose poor board and management decisions shrank return on invested capital by among other things splashing $3.5 billion on a US acquisition, Headwaters.

At the start of the year Boral was a house in dire need of renovation. But Stokes was not the only investor, nor the first, to see its potential.

Investor John Wylie picked up just under 5 per cent of the stock earlier this year upon which he wrote to Boral chairman, Kathryn Fagg, with a plan to break up the company for fear it would become subject of an opportunistic takeover.

At the time Fagg appeared unmoved by Wylie’s investment counsel, declaring the board was supportive of the then chief executive Mike Kane and his global strategy.

In the meantime another couple of activist shareholders including Perpetual had either joined the register or boosted their holdings in anticipation of Boral’s balance sheet and financial performance renovation.

Much has changed since Wylie spearheaded the push to overhaul Boral. The company has written down the value of numerous investments including a decent-sized chunk of the goodwill from Headwaters, Mike Kane has left the building and now there are four new board members – two of whom represent Stokes.

The appointment of two Stokes representatives makes it clear that Fagg has lost control of Boral’s agenda. Stokes is now in de facto control.

Most importantly Boral has acquiesced to the various activist shareholders to undertake a review of the company’s operations. If and when major asset sales are undertaken, Boral could avoid the need for a large equity issue to tide it through a cyclical and COVID trough.

The appointment of two Stokes representatives makes it clear that Fagg has lost control of Boral’s agenda. Stokes is now in de facto control.

Fagg keeps her chairman’s pay so long as she behaves in line with Stokes’ wishes. Seven ticked off on the appointment of Boral’s new chief executive, Zlatko Todorcevski.

It has been reported that Wylie has argued Fagg should resign and that he believes Seven Group should have been eligible for one board representative – rather than two. But there will be plenty of shareholders watching from the sidelines who will have little to complain about.

Just the spectre of an overhaul at Boral has been responsible for a more than doubling of its share price over the past six months. The stock jumped 5.7 per cent alone on Monday after the new board appointments were announced.

It is a stock for which the market now has great expectations.