Australia's largest steelmaker, BlueScope Steel, is set to deliver a substantial cash windfall to its shareholders, announcing a special dividend worth $438 million. This significant payout comes just over a week after the company's board firmly rejected a multi-billion dollar takeover proposal that sought to break up the iconic Australian industrial group.
A Dividend Funded by Strategic Asset Sales
The special unfranked dividend of $1 per share will be paid on February 24, 2026, following the release of the company's first-half results on February 16. BlueScope has confirmed the payout will be funded from surplus cash generated through a series of strategic divestments.
Key sales include the company's 50 per cent stake in the Tata BlueScope joint venture, which supplies coated steel products to the Indian market. Furthermore, the Illawarra-based operator has sold 33 hectares of land in West Dapto, near its Port Kembla steelworks on the NSW south coast, for $76 million. An additional $200 million in working capital is being released from residual projects within its property division.
Board Insists Payout Independent of Takeover Drama
In a statement released on Wednesday, January 15, 2026, BlueScope was keen to distance the dividend decision from the recent corporate activity. "This dividend decision is part of BlueScope's established capital management framework and is independent of any prior or potential future proposals for the company," the statement read.
This follows the rejection of a $13.2 billion non-binding takeover offer from a consortium comprising the Stokes family-controlled SGH and its American partner, Steel Dynamics. The offer, made on December 12 and revealed publicly on January 5, proposed splitting BlueScope, with its Australian assets going to SGH and its US operations to Steel Dynamics.
BlueScope's board labelled the offer, originally pitched at $30 per share, as one that "dramatically undervalued" the company. The consortium had stipulated that any dividends paid after December 12 would reduce the offer price, making the current proposal effectively $29 per share.
Capital Management Choices and Market Reaction
Analysts noted that an unfranked dividend is not the most tax-efficient method of returning capital, as shareholders cannot use franking credits to offset the tax payable. In such situations, companies often opt for an on-market share buyback. BlueScope stated a buyback was not feasible "in light of corporate activity and regulatory settings."
Market reaction was muted following the announcement. BlueScope shares closed at $29.76 on Wednesday, a slight decrease of 0.3 per cent from the previous day's close. The share price has seen significant growth over the preceding twelve months, buoyed by strong earnings and the takeover interest.
Morningstar equity analyst Esther Holloway told the Australian Associated Press that the special dividend represented sound capital management following the company's asset sales and cost-saving initiatives. She added that she did not interpret the move as a direct response to the recent takeover bid.
CEO Mark Vassella expressed confidence in the company's trajectory. "This special dividend demonstrates BlueScope's ability to generate and distribute returns to its shareholders," Mr Vassella said. "With a clear line of sight to the completion of our current significant capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further."
The consortium behind the rejected takeover has yet to formally respond to BlueScope's dismissal of their proposal. The path forward for Australia's premier steelmaker now focuses on executing its growth strategy while rewarding its patient shareholders with a nearly half-billion dollar payday.
