BREAKFAST DEALS: Open roads
Two takeover-focused investors withdraw from infrastructure group Transurban, while Rio Tinto accedes to a Chinese miner.
Transurban Group, CP2
The Australian fund manager that tried unsuccessfully to grab Transurban Group with a $7 billion takeover bid has dropped the majority of its 12.6 per cent stake, freeing up the road toll company’s register in the process. UBS did the deed, and the trade went through at $5.51 a pop, a 3.2 per cent discount, for a grand total of $632 million, said to be on behalf of British Universities Superannuation Scheme and ATP, of Denmark, who wanted a little less road in their portfolios.
The question is whether this news increases or decreases the likelihood of Transurban being a takeover target. CP2 launched the original takeover offer in conjunction with the Ontario Teachers Pension Plan and the Canada Pension Plan, both of which have sold down their stakes.
With two shareholders that have a conceivable interest in seeing a takeover offer blocked off the register, it's easy to say that anyone else interested has a more clear run at the company. We’ll have to wait and see.
Extract Resources, Rio Tinto, China Guangdong Nuclear Power
Rio Tinto has accepted China Guangdong Nuclear Power's offer for its 14 per cent stake in Extract Resources, but still remains open to jointly developing assets. Guangdong is after the Husab uranium project in Namibia and since early 2011, when Guangdong started talking to 42 per cent Extract shareholder, the UK’s Kalahari Minerals, the theory was that Rio might try to strong-arm the Chinese into linking up Husab with its own neighbouring asset, the Rossing project.
Given that Rio also held a stake in Kalahari, there were two windows for the miner to push Guangdong if it had a compelling case. But there always were two problems. Rio’s stakes in either company never appeared big enough to halt Guangdong’s pursuit and its Rossing project is getting a little long in the tooth.
Meanwhile, Rio Tinto has joined the stampede of big ticket miners milking the US credit markets. Rio priced $US2.5 billion ($2.4 billion) in bonds with an average maturity of 11 years and a coupon of 2.97 per cent on the US market, joining rivals BHP Billiton and Fortescue Metals Group as a recent visitor. Rio tapped Citigroup, Credit Suisse, Deutsche Bank and JPMorgan to be joint bookrunners.
Perhaps outgoing Future Fund chairman David Murray might lament such an event, not that he’d have a problem with Rio raising cash. Speaking to The Australian, Murray called for a straight-up list of corporate bonds, adding that local superannuation funds are too heavily weighted towards equities.
Online job ads company Seek should think about launching Chinese website Zhaopin onto the Nasdaq some other time, at least according to Morgan Stanley. The Australian brings word from analyst Andrew McLeod, who says this is not the "optimal time” for an IPO given that "Zhaopin has just turned profitable and still has substantial expansion plans and structural growth ahead”.
Seek hasn’t announced any firm plans to float the asset – of which it owns 56.1 per cent and Macquarie Capital 38 per cent – but reports have indicated that Credit Suisse is in line to lead the IPO.
Ten Network, Eye Corp, DMG Radio
A few things need to happen before the 'review' that Ten Network is conducting of its outdoor advertising unit Eye Corp turns into a sale. However, The Australian Financial Review has thrown up an enticing idea about what the TV network might do with the money – expected to be something in the vicinity of $135 million. The newspaper says Ten may think about using the money to purchase DMG Radio, owned by chairman Lachlan Murdoch.
Now this is all very, very early. But if that eventuates it’s going to be a hard sell. Think Kerry Stokes’ merger of his public media interest in Seven Media with his private mining equipment interest in WesTrac, or Nathan Tinkler’s sweetheart deal with Boardwalk Resources in the Whitehaven Coal-Aston Resources deal. When a deal hits close to the board, it has to be a good one, or the beneficiary has to command too much power for objections to matter – or a combination of both.
Viterra, Glencore International
The competition watchdog says it will take a good look at the speculation for Canadian grain business Viterra, which crystallised overnight as a takeover offer from Glencore International, worth $C6.1 billion ($5.7 billion). The Australian Competition and Consumer Commission says it "may decide to conduct a public review” depending on who the bidder is. Well, now we know.
Viterra has a big presence in Australia, thanks largely to its acquisition of ABB Grain. If the ACCC has a problem with the takeover, one could imagine a scenario whereby the competition watchdog says an asset must be divested or partially sold off. Whatever the ACCC’s concerns are, at least now they know what they’re dealing with.
Chairman of mining giant BHP Billiton, Jacques Nasser, has reportedly told investors that the mining giant is having another look at its big spending plans. Without any other details that’s a seriously broad brush stroke, but readers should just be aware that if BHP rejigs a deal that, well, Jac did warn us. Meanwhile, coal miner New Hope said in its results yesterday that no definitive proposals had been received despite a number of parties conducting due diligence. Kind of disappointing after all that.
And finally, for superannuation funds that already have enough holdings of their infrastructure funds tied up in Transurban, The Australian Financial Review reports that they might be interested in the Bankstown and Camden airports in Sydney.