BlueScope's takeover standoff plays out against a surging US steel cycle

L1 Capital, Ten Cap and Alphinity detail the case behind BlueScope's rejection of a consortium's $34 a share offer

6 Jul 2026 · 8 min read

BlueScope Steel has spent 2026 fighting off a takeover consortium while riding a surge in US steel spreads that fund managers say validates a thesis some of them have held for a decade.

Alphinity Investment Management summed up the current mood in an Article in July 2026, with portfolio manager Stephane Andre saying the firm likes BlueScope at this point in time. Management is very solid, the manager said, describing new CEO Tania Archibald, previously CFO and head of the Australian business, as managing the company really well while defending against the takeover approach from Seven Group and Steel Dynamics.

There's quite a lot of upside of what's happening in the US. The US steel spreads there have increased by more than 50%. The demand has improved a bit because of the data centres.

— Alphinity Investment Management, Article, July 2026

The takeover saga: from $30 to a contested $34

The corporate action began in earnest in January 2026, when BlueScope confirmed it had received a conditional all-cash takeover offer at $30 per share from a consortium led by Steel Dynamics and Seven Group Holdings, under which Steel Dynamics would acquire the North American assets and SGH would take the remainder. The BlueScope board rejected the proposal, saying it drastically undervalued the company.

L1 Capital, BlueScope's second-largest shareholder behind AustralianSuper, gave the most detailed account of the thesis behind the resistance in a Quarterly Report in December 2025, noting it had first invested in BlueScope at around $3.60 in 2015 and describes the business as high quality, resilient, strategic and almost impossible to replicate. The manager said the four separate approaches made by Steel Dynamics validated that view, arguing BlueScope traded well below its sum-of-the-parts valuation across three components: its U.S. steel-making assets, its Colorbond and coated products business, and roughly 1,200 hectares of surplus land, significantly in New South Wales, to which the market had attributed little to no value.

By March 2026, the consortium returned with a revised best and final offer of $32.35 per share, ex a $1.65 dividend already declared, equating to $34 including the dividend and a 47% adjusted premium. L1 Capital said in a Quarterly Report that BlueScope had responded with a list of conditions necessary to engage and provide due diligence, including adjustments to the offer valuation, while noting press speculation that BlueScope was separately preparing an auction process for its North American business, against a backdrop of U.S. steel spreads remaining above US$600 a tonne.

This proposal was an attempt to take BlueScope from its shareholders on the cheap. It drastically undervalued our world-class assets, our growth momentum, and our future — and the Board will not let that happen.

— BlueScope board, quoted by L1 Capital, Quarterly Report, December 2025

Pendal Group said in a Newsletter in March 2026 that BlueScope had accelerated its program to realise value from its property portfolio as part of its defence strategy against the bid, including the initiation of a lease of a 10-hectare site in West Dapto and the start of a sale process for a 65-hectare logistics hub in Western Port.

Where the bidding stands now

The most recent update from L1 Capital, in a Presentation in June 2026, said the consortium's offer had effectively risen to $34 a share, adjusted to around $31 once dividends and the time value of money are accounted for, with BlueScope trading close to that adjusted offer price and signalling a willingness to engage only on improved terms. The manager said current US steel spreads are well above market forecasts for FY27 and it expects first-half FY27 earnings to be significantly higher than prior market estimates.

L1 Capital also noted BlueScope's share price has materially underperformed US peers Steel Dynamics and Nucor over the past 12 months, given roughly a third of its earnings exposure sits in Australia and Asia, which have not experienced the same buoyant conditions as the US market.

The North American spread cycle underneath the takeover story

Beneath the corporate drama, the operating thesis several managers point to is straightforward: BlueScope's North Star mill in Ohio has become the dominant earnings driver, and US steel tariff protection has pushed spreads sharply higher. Ten Cap said in a Monthly Report in November 2025 that through its North American steel manufacturing footprint, the company offers high beta exposure to US construction and manufacturing activity, and that at current Mid-West steel spreads, North Star now accounts for more than 50% of BlueScope's earnings profile.

Blackwattle Investment Partners said in a Monthly Report in May 2026 that BlueScope was a key positive contributor, with the AI investment thesis flowing directly to the stock through its US steel business: US steel prices rose 20% year to date and spreads at North Star moved 26% higher, driven by data centre and infrastructure-related demand, while Asian spreads also lifted for the first time since mid-2023.

Ten Cap added in a Monthly Report in May 2026 that it increased its position in BSL, supported by improving steel spreads, exposure to the US construction and infrastructure capex cycle and a strong balance sheet, describing the stock as reflecting the capex thematic through diversified exposure to the picks-and-shovels of that cycle.

We increased our position in BSL, supported by improving steel spreads, exposure to the US construction and infrastructure capex cycle and a strong balance sheet.

— Ten Cap, Monthly Report, May 2026

How the thesis has evolved through the year

Positioning shifted materially as the takeover saga unfolded. Perpetual Asset Management said in a Monthly Report in March 2026 that after the share price declined 18.7% from its January peak on the initial bid speculation, it took the opportunity to meaningfully add to its position, believing the dislocation represented a discount to the implied valuation floor, while pointing to management's plans to accelerate the surplus land realisation and lift the shareholder distribution target to 75% of free cash flow.

Not every manager stayed the course. Equity Trustees Asset Management said in a Quarterly Report in March 2026 that it exited BlueScope following the rejected takeover offers, taking the opportunity to lock in profits and deploy the cash elsewhere, while Katana Asset Management said in a Monthly Report in April 2026 that it used market strength to trim holdings while exiting the BSL position entirely.

Others read the same events as reason to hold firm. Airlie Funds Management said in a Monthly Report in March 2026 that BlueScope's North American steel mill is a high-returning, unique asset that should generate strong cash flows for shareholders throughout the cycle, and that it took several undisclosed bids and an outright takeover offer for the market to value these unique assets more accurately, though the manager still sees further value uplift to come.

What managers are watching next

With the consortium's adjusted offer sitting close to where BlueScope now trades, and US steel spreads running well above the levels the market had forecast for FY27, the managers still positioned in the stock say the next catalysts are whether the bidders return with genuinely improved terms, and whether the current spread strength converts into the earnings upgrades L1 Capital and others are now forecasting.