BREAKFAST DEALS: Seek gold

Classifieds website Seek gears up for a savvy move in China, while Qantas secures a boost for Jetstar Pacific.

If you want to strip investing principles back to something ludicrously simple, Seek’s investment in employment website Zhaopin looks like the savviest of moves, because it’s online and it’s China. Macquarie Capital, which jumped in with Seek in 2008, has reportedly signed up some lead managers of a planned float that will turn a $US100 million investment into a $US1 billion float. Speaking of Macquarie, the investment bank has signed up Thailand’s third largest bank, K Group, for an exclusive strategic partnership. Elsewhere, Qantas finally has some good news with a breakthrough in Vietnam, while speculation is building that Billabong International will say no to TPG Capital. And finally, BHP Billiton is jumping into the US bond market again.

Seek, Macquarie, Zhaopin

Online classifieds company Seek is reportedly believed to be on course to float its Chinese website Zhaopin on the Nasdaq later on in 2012. Seek owns 56.1 per cent of the company and Macquarie Capital, which owns 38 per cent, has leant on its US arm and that of Credit Suisse to lead manage the float, the Australian Financial Review reports.

This project dates back to July 2008, when Seek put up $US45 million ($41.7 million) to bump its stake in Zhaopin to 43 per cent from 25 per cent, while Macquarie threw in $US60 million for a 29.1 per cent stake. The move has paid off handsomely with expectations settling on a float valuation of $US1 billion.

Macquarie Group, K Group

Speaking of Macquarie, the silver donut is adding Asia to its list of expansion destinations. Macquarie has inked an exclusive strategic alliance with Thailand’s K Group, the country’s third-largest financial institution. The deal covers equity capital markets transactions, inbound and outbound mergers and acquisitions and institutional equity sales.

Qantas Airways, Jetstar Pacific, Vietnam Airlines

Qantas Airways chief executive Alan Joyce may have the respect of corporate Australia, but between high fuel prices, union battles and a fleet grounding he hasn’t had a great deal to smile about lately. At long last though, there’s some good news out of Vietnam. Qantas has secured agreements for an ownership restructure of Jetstar Pacific and a capital injection for the low-cost airline operating in one of the world’s aviation hotspots.

Vietnam Airlines will take the majority stake in Jetstar Pacific that’s currently held by Vietnamese State Capital Investment Corp, Qantas will lift its existing stake from 27 per cent to 30 per cent, and the newly structured airline will receive a capital injection of $25 million, of which $7.5 million will come from Qantas. The funds will go towards fleet renewal.

Billabong International, TPG Capital

Clothing company Billabong International is increasingly expected to reject TPG Capital’s $3 a share takeover proposal as inadequate. According to The Australian, one fund manager with shares in Billabong would knock the opportunistic proposal back because it "doesn’t offer enough of a premium”. Given that Billabong shares are 58.5 per cent higher than they were before the offer dropped this might seem confusing, but the reason is hidden in the multiples.

Billabong offloaded that 48.5 per cent stake in Nixon for $US285 million, which equates to a 9.2 EBITDA multiple. The TPG offer comes in at 7.5 times EBITDA. That’s a sizeable gap and because founder and major shareholder Gordon Merchant is unlikely to be particularly happy with such a number when Billabong stock was at $8 just 12 months ago – and he’s a director who will need to sign off on it – this might be stuck for the moment.

PaperlinX

The PaperlinX board isn’t rushing into the arms of management expert and shareholder Andrew Price, with its biggest shareholder pushing for his election to the board even at the expense of current chairman Harry Boon. The Australian Financial Review understands that only after today’s results will Price sit down formally with the board, even though Orbis Investment Management, with its 18 per cent of the register, has been pushing for action.

Of course, this all comes in the wake of frustration on the register following a $117 million approach from someone, said to be Platinum Equity, that was apparently halted by the company’s hybrid holders. Boon is refusing to step down, although you’d have to understand the frustration of shareholders who have watched their stock price drop 78 per cent in the last 12 months.

BHP Billiton

Mining giant BHP Billiton is jumping on the bond market train, but its destination is the US. Dow Jones reports that BHP Billiton Finance, the miner’s financing arm, is planning to issue a five-year bond deal, the proceeds of which will be used for general corporate purposes and to pay down debt. The size of the offer, which is being underwritten by Barclays Capital and JPMorgan, is not yet known.

Deep Yellow, Toro Energy

Still in mining, Deep Yellow and Toro Energy have hit a spot of luck in Namibia. The two companies own 65 per cent and 25 per cent of Nova Energy, which has just had three of its exclusive prospecting licences renewed for another two years. The reason why its territory is being watched is because it happens to sit next to one of the world’s largest uranium deposits, Husab. Keen nuclear watchers will know Husab is the prize asset of Extract Resources, which is currently looking at a $2.2 billion downstream offer from China Guangdong Nuclear Power Corp.

Austar United Communications, Foxtel

Regional pay TV operator Austar United Communications will give the market a reminder tomorrow about just how much the Foxtel takeover, worth $2 billion, is worth to the company. Austar shares are trading at a significant premium to their underlying value, though a little short of the $1.52 a share on offer from Foxtel, as investors play a great guessing game of whether the consumer watchdog will give the deal a thumbs up or a thumbs down. This is starting to feel like a game of monopoly however, with the Australian Competition and Consumer Commission taking all the time it needs to decide and Foxtel throwing all the documents it can to persuade them.

iiNet, Internode

iiNet and Internode have given an emphatic signal of how their union is going to work. While Internode managing director Simon Hackett manages the fusion of his internet service provider and iiNet, which cost iiNet $70 million, his counterpart Michael Malone is planning to push hard into two areas – copper-based internet and mobile phones.

According to Fairfax, Malone says the company will continue to push in to ADSL services even as fibre optics is rolled out. ‘‘[Without] a clear plan for where NBN Co is going and on what dates, we are just going to work on the basis that wherever we have sufficient number of customers and access to backhaul, we will be lighting up [networks],” Malone said, according to the publisher. Meanwhile, The Australian quotes Malone as saying the company needs to get "serious” about mobile phones, with a comparatively modest 80,000 customers under its belt.

Wrapping up

Australian Infrastructure Fund is looking to offload its stake in Port of Portland and its share of Sydney’s monorail and light rail service. Still in transport, the Bankstown and Camden airports have been put up for sale after BAC Holdco decided to get out of the market, The Australian reports.

Northern Star Resources has raised $45 million from a 90 cents-a-share placement, through Azure Capital, to boost its cash reserves to $80 million. Downer EDI has ruled out selling its New Zealand operations, and OneSteel has done the same for its Whyalla site, so prospective suitors can look elsewhere. The Middle East subsidiary of Leighton Holdings has won a $515 million contract to construct a luxury hotel in Dubai. Habtoor Leighton Group has been picked out to build two multi-storey towers with 1,600 rooms.

And finally, French energy giant Total SA wants another 6 per cent of the $US34 billion Ichthys LNG project.

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