BREAKFAST DEALS: Seek's Chinese treasure

Seek finally confirms it will float its Chinese business Zhaopin, while Leighton prepares to offload a large telco stake to Canada.

At long last, Seek has revealed that it’s planning to float its Chinese online ads business Zhaopin. Seek and James Packer are set to clean up. Leighton Holdings has chosen a Canadian pension plan to buy a majority stake in its telco business. Meanwhile, Seven West Media isn’t interested in a Perth newspaper amid stubbornly poor advertising markets, Harry Triguboff is reportedly musing about a Stockland Property Group and National Australia Bank has bumped up the size of its hybrid issue.

Seek, Zhaopin

Seek chief executive Andrew Bassat has reportedly confirmed that the online jobs ads company will launch its Chinese business Zhaopin onto either the Hong Kong Stock Exchange or the Nasdaq.

Yesterday, Seek shares surged 8 per cent as the company books a record December half net profit of $67.5 million, up from $60.6 million in the previous corresponding period.

The company added that overseas markets are expected to provide the much needed growth avenues as Seek deals with a rather subdued Australian job ads market.

And speaking of overseas, The Australian Financial Review reports comments from Bassat about the company’s float plans for Zhaopin after August.

"We’re open to Hong Kong and the Nasdaq at the moment,” said Bassat, according to The Australian Financial Review. "We’re not committed to either.”

Speculation about this move has been around for years. The last word we heard was way back in June when a report indicated that a float would happen later in 2012. Turns out it was later in 2013.

Billionaire James Packer is a 22 per cent shareholder in Zhaopin and Seek’s stake just jumped to 78 per cent from 56 per cent after Macquarie Group, along with other minority shareholders, sold out of the Chinese company.

Bassat said Seek wouldn’t sell out of Zhaopin.

Leighton Holdings, Ontario Teachers Pension Plan

There are a few things to unpack from the news that Leighton Holdings is in exclusive negotiations to sell a 70 per cent stake in its telecommunications assets with Canada’s Ontario Teachers Pension Plan for up to $620 million.

The most obvious is the fact that the recent expectations, some that have been reflected in this column, that big sovereign wealth funds particularly from Canada and China would play a big role in Australian M&A have been vindicated.

Eight months ago, OTPP went in with Hastings Funds Management for the Sydney desalination plant privatisation. We should expect more from the Canadians, particularly on the infrastructure front.

OTPP beat out Australia’s TPG Telecom, which plunged 9.4 per cent in response to the news that values the total Leighton telco business at $885 million. Leighton shares finished the session 3.6 per cent higher.

The market was hoping that TPG would win the race because there were synergy opportunities with Leighton’s fibre cable network Nextgen Networks, data-centre provider Metronode and cloud computing service provider Infoplex.

Hopes that the assets could generate $1 billion weren’t met, but the Canadian pension fund still had more firepower than TPG.

The Australian Financial Review reports that OTPP pipped US hedge fund Apollo Global Management and Hong Kong-listed telco PCCW. The Australian understands that Macquarie, Morgan Stanley and HSBC are funding the deal.

Seven West Media, Seven Group Holdings

Seven West Media chief executive Don Voelte has taken near-term acquisitions off the table after the company swung from a $163 million profit December half profit in 2011 to a $109.4 million loss in 2012.

Seven West has been reportedly interested in buying Perth’s Sunday Times, which is currently owned by News Limited, the owner of this website. Voelte put a big bullet through that idea.

For a while it’s been speculated that Seven Group Holdings billionaire Kerry Stokes might take the money he picked up from the sale of Consolidated Media Holdings to News Limited and take Seven West private.

That speculation died down in a big way towards the end of last year as the media stocks started to climb again. In fact, for readers that don’t buy the sharemarket rally, a fun example to use is that Seven West is up 114 per cent from November 9.

Has anyone seen any evidence of a rebound in the advertising market?

Yesterday, Seven West shares dropped 7 per cent. No one knows the mind of Stokes, but that rally will need a bit more cut out of it to present a compelling buying opportunity.

But perhaps this is a question also for Ryan Stokes, the heir apparent to father Kerry’s company now that his brother Bryant has resigned from the Seven Group board.

Harry Triguboff, Stockland Property Group

Australian apartment legend Harry Triguboff is reportedly thinking about merging his real estate portfolio with b

The Australian Financial Review reports that sources "familiar with the billionaire’s thinking” indicate that he’s pondering a backdoor listing into Stockland, or a reverse merger.

However, the newspaper also reports that spokespeople for Triguboff’s business Meriton and Stockland denied that anything’s going on.

The report comes amid a great amount of optimism for property deals. GPT Group is of course pursuing AustraLand, with reports that Mirvac could also be interested.

While that’s the headliner, Brookfield Office Properties is thought to be reconsidering floating its $4.2 billion Australian office portfolio.

National Australia Bank

As has been the trend lately, National Australia Bank has massively increased the size of an alternative fundraising instrument following strong demand from the domestic market.

The size of NAB’s tier-one hybrid, the Convertible Preference Shares, has been bumped up to $1.4 billion from $750 million.

Perhaps because of the strong demand, NAB has been able to set the margin at 3.2 per cent, the low end of the 3.2-3.4 per indicative range.

The securities, priced at $100, will eventually convert to NAB shares in 2021.

NAB has said the funds from the CPS would be used for general corporate purposes.

Wrapping up

Speaking of fundraising, SP AusNet has successfully issued a $HK700 ($87 million) 15-year bond. The proceeds will go towards debt refinancing and capital expenditure.

APA Group managing director Michael McCormack was keeping his cards close to his chest during yesterday’s interim results presentation in relation to the sale of the Moomba-Adelaide gas pipeline.

The pipeline sale was a condition set by the Australian Competition and Consumer Commission for its purchase of Hastings Diversified Utilities Management.

Meanwhile, the Federal Court has dismissed two tax debt cases against embattled coal tycoon Nathan Tinkler, including in relation to the Newcastle Knights.

Tinkler’s tax difficulties have often been the basis of speculation about his stake in Whitehaven Coal, against which he’s widely reported to have a big loan with Farallon Capital.

And finally, Breville shares were sold off hard yesterday amid concerns that it might lose a crucial distribution deal with GMCR Canada, the owner of the brand Keurig, a single-cup coffee brewing company.


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