Perpetual cuts stake in Boral despite push against Seven board seats

Activist shareholder Perpetual cut its stake in Boral before objecting to the appointment of two directors from Kerry Stokes’ conglomerate Seven Group to the building materials giant’s board.

A substantial shareholder notice published on the ASX platform shortly before 7pm on Friday revealed Perpetual had reduced its stake in Boral to 5.46 per cent, which was down from the 6.54 per cent recorded on the previous notice.

Perpetual has been very active on the Boral register through 2020, both buying and selling shares.
Perpetual has been very active on the Boral register through 2020, both buying and selling shares.Credit:Ben Rushton

The change equated to the sale of about 13.2 million shares since August 12, with hundreds of thousands of Boral shares sold on October 7 at the healthy price of $4.78 each.

Just a day earlier on October 6 Perpetual Investments’ head of equities Paul Skamvougeras and Tanarra Capital’s John Wylie wrote to Boral chairman Kathryn Fagg, questioning the appointment of two executives from Seven Group Holdings to the Boral board.


The pair of investors, who said that combined they represented more than 10 per cent of the issued share capital of Boral, raised a series of concerns with the appointments, claiming the move gave Seven too much influence over Boral.

“Our issues go to: the disproportionate nature of Seven being granted two board seats relative to its shareholding, which gives excessive influence to one shareholder in the company; the lack of obvious incremental benefit to the company by entering into these arrangements; and the lack of transparency around the contractual arrangements that have been entered into,” the pair wrote.

Mr Skamvougeras declined to comment on Sunday. Two weeks ago Boral told the market it had appointed Seven Group chief executive Ryan Stokes and Seven Group chief financial officer Richard Richards to its board.

Boral said at the time that Mr Stokes and Mr Richards would “add to the skills capability of the board. Both nominees have acknowledged the importance of acting in the interests of all Boral shareholders and managing any conflicts of interest carefully.”

According to the most recent filing Seven Group holds a hefty 19.984 per cent stake in Boral, just below the 20 per cent threshold that would require it to launch a takeover under Australian laws. Mr Stokes recently told The Age and the Herald that Seven Group had been watching Boral for about six to 12 months before it began investing in it earlier this year.

Perpetual has been a significant buyer of Boral shares through calendar 2020, picking up some just below $5 in late January before the market sunk. On March 24, the day after the Australian market hit its low, Perpetual scooped up 1.3 million Boral shares at just $1.75 each.

Boral recently appointed Zlatko Todorcevski as its new CEO after a challenging two year period where it issued multiple profit downgrades.

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