BREAKFAST DEALS: Can sell QR

Campbell Newman has flagged his intention to sell the final stake in QR National, while Harry Winston Corp emerges as a possible buyer of Rio's diamonds.

One story outshines all others this morning, and that's Rio Tinto's diamond review. Now that we know the miner is open to the sale of one or more of its diamond projects, the focus shifts to the price and who might buy – and there's speculation Rio has already been approached. Meanwhile, Campbell Newman offers a peek at his plans for Queensland's big stake in QR National, and Woodside Petroleum hones in on a buyer for a share of Browse LNG. Elsewhere, Oz Minerals closes its war chest – for now – and there's talk of a Treasury Wines takeover. Plus, Macquarie Group could find partners in China.

Rio Tinto

If diamonds aren't Rio Tinto's best friend, then whose are they? As the miner considers its options for its diamond assets, including its Argyle mine in Western Australia and its 60 per cent stake in Diavik, in Canada, Harry Winston Corp is expected to pay particularly close attention. It owns the rest of Diavik, and could be considering taking the lot. Argyle's fate is less certain, although Gina Rinehart's name is being thrown around. Rio might even manage to steal away groups led by private equity kingpins Kohlberg Kravis Roberts and Apollo Global Management, which are said to have taken a look at BHP Billiton's Ekati diamond mine in Canada.

Of course, everything depends on the price. Most analysts value Rio's diamond division at between $2.5 billion and $5 billion, although Macquarie is out with a much more sober estimate below $1 billion. There must be some fear at Rio Tinto that Macquarie is closer to the mark, given that BHP Billiton already has similar assets on the market.

Or perhaps Rio has already sounded out buyers. In The Australian, there is a suggestion that the miner launched the review in response to approaches it received from interested parties. Watch this space.

QR National

Queensland's new premier, Campbell Newman, has indicated that the state is preparing to sell its remaining 34 per cent stake in QR National, according to The Australian Financial Review. The shares are currently worth about $3 billion – close to 50 per cent more than when they were floated in 2010.

Newman wouldn't say when the government plans to sell – only that it is committed to securing the best price. However, it is required to wait at least until August, when QR releases its full-year results. It is also unclear whether the sale will come all at once, or in tranches.

But investors waiting for all those new shares to flood onto the market might be disappointed. QR National’s chief, Lance Hockridge, previously raised the possibility of the company buying back some of the government's stake.

Woodside Petroleum

Woodside Petroleum is said to be close to finalising the sale of a stake in Browse LNG, which could fetch up to $2 billion, according to The Australian Financial Review.

Japan's Mitsui-Mitsubishi venture, which is also a partner in the North-West Shelf LNG, is said to be the most likely buyer as it moves to boost its exposure to Australian gas. However, the newspaper also lists Korea Gas Corp, PetroChina and even Thailand's PTTEP as rumoured contenders.

For now, Woodside chief Peter Coleman is keeping his lips sealed. But an official announcement can't be too far away.

Orica

Orica has signed JPMorgan as an advisor for the chemical maker's potential sale of Bronson & Jacobs, a specialty distributor of food ingredients and essential oils, according to The Australian Financial Review. Sources told the newspaper that the auction started last month and has already attracted strong interest.

The news comes amid suggestions Orica's new boss, Ian Smith, could be planning a full exit from the company's non-mining businesses to refocus on the most valuable part of its operations. In that case, B&J could signal the beginning of a much larger sale process.

Oz Minerals

Just when we were getting excited about Oz Minerals flashing its chequebook, the miner has pulled out of the contest for Romanian gold and copper miner SC Cuprumin SA Abrud for fear of overpaying.
The local miner ditched the deal after an auction yesterday, where bids jumped to more than $360 million, said the The Australian Financial Review. That's a lot more than the $79 million figure attached to initial reports about Oz's interest.

Still, with $890 million in spare cash and an openness for acquisitions, Oz remains a company to watch.

Treasury Wines

Treasury Wines executives paid a trip to China recently, where talks with investment house Reignwood Group are said to have turned to a takeover of the local winemaker, The Australian Financial Review reports.
While Treasury's healthy share price might make a full buyout too expensive, the newspaper says there could be merit to the former Foster's division taking on a strategic investor in China, where Treasury is trying to strengthen its standing. It couldn't hurt to have a strategic ally there to help boost local distribution.

Wrapping up

There's also speculation about Chinese partnerships in the local financial sector this morning, with a report in The Australian Financial Review suggesting firms like Agricultural Bank of China or the Industrial and Commercial Bank of China might be interested in making a strategic investment in Macquarie Group. The thinking goes that Macquarie would offer access to Australia, the US and Europe, and could also be tapped to run deals in unfamiliar territories.

Meanwhile, the Australian Competition and Consumer Commission has put off its decision on the Foxtel-Austar merger as it continues talks with the Foxtel. The regulator is expected to explore concerns that the deal would leave Telstra, Austar's biggest shareholder, with too much power in the new IPTV market, according to The Australian. No new deadline has been set for the ruling, although Austar shareholders will still meet on Friday to vote on the deal.

Elsewhere, Aquila Resources has reached a short-term deal with Brazilian miner Vale over production at Isaac Plains, their Queensland joint venture, The Australian reports. However, the two parties do need to sort out a long-term solution to their disagreement about whether they have the right to separately take their share of the coal from the mine and deliver it to their own buyers, as Aquila argues. If the row continues, it's conceivable that Vale might buy the whole project – which it has previously expressed interest in doing.

Related Articles