Which ASX companies are deploying dividends to secure a $1.9 billion deal?

Animation of man and woman shaking hands on a deal on top of gold coins.

It turns out everyone loves ASX dividends! I mean, who would have thought it? Most ASX investors enjoy a good dividend payment for the same reasons any of us like to see labour-free passive income drop into our pockets.

Most of the time, ASX dividends are used to pay bills, buy more ASX dividend shares, or (less admirably) a big night out.

But today, we’ve got a reminder that dividends can be used as a dealmaker too.

One of the biggest deals currently sitting on the ASX is the takeover attempt on ASX 200 construction materials company Boral Ltd (ASX: BLD) by Seven Group Holdings Ltd (ASX: SVW). Seven has been after Boral for years now, with the two playing a fairly vigorous game of corporate cat and mouse.

Seven has amassed a stake in Boral of almost 80% over the past year or two but wishes to seal the deal with a full takeover.

Before today, the most recent development was the rejection last month of Seven’s full takeover offer of 0.1116 Seven shares, as well as $1.50 in cash, for every Boral share owned. As we covered at the time, this valued Boral at approximately $6.07 a share.

Boral rejected this offer last month, citing concerns that the offer “does not represent appropriate value for minority shareholders”.

But it appears that a fresh offer from Seven has finally clinched Boral’s approval. The secret ingredient, or sauce, if you will? ASX dividends.

ASX dividends clinch Seven-Boral deal

In an ASX release this morning, Seven detailed an improved offer for Boral shares to 0.116 Seven shares, and a buffed-up $1.70 in cash per share. That $1.70 in cash includes a provision that will see Seven pay all shareholders, existing and new, a special dividend worth 30 cents per share, fully franked, upon completion of the deal.

Boral has also announced that it will pay a fully-franked dividend of 26 cents per share to investors, as well as potentially conducting a $350 million share buyback program on Boral’s remaining outstanding stock.

If Boral pays out this dividend, Seven has said that its cash offer per share will reduce to $1.44 per share to reflect this.

In light of these new dividend proposals, as well as the reality that Seven controls nearly four-fifths of Boral’s stock, Boral has finally consented to the deal and recommended shareholders vote in favour of it. Here’s some of what the company said:

[Boral] believes that the SGH [Seven Group Holdings] Offer represents the most attractive outcome available to Boral Shareholders, particularly when measured against the risks of remaining as a minority shareholder now that SGH has a total interest of 78.8% in Boral.

Accordingly, the [Boral Bid Response Committee] unanimously recommends that Boral Shareholders ACCEPT the SGH Offer or sell their Boral Shares on-market.

So it appears that a slew of new ASX dividends has finally won the day for Seven, and Boral’s ASX future now looks limited.

The Boral share price is up 1.82% in response today to $6.14 a share, while the Seven share price is flat at $40.03.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.