Breakfast deals: Wilson HTM treasure

There's talk of a Treasury Group play for a Wilson HTM, while Jacobs Engineering could own Sinclair Knight Merz within two weeks.

Wilson HTM once again finds itself to be the object of attention, though this time it’s a suitor with deeper pockets. And behind it all may be a familiar face in former managing director Andrew Coppin. Meanwhile, Sinclair Knight Merz is reportedly on the verge of accepting a $1 billion takeover offer, a Senate committee bizarrely calls for an independent review from the ACCC on Graincorp, a Perilya buyout is in the offing and the IPO market gets a shot in the arm.

Wilson HTM, Treasury Group

Wilson HTM shareholders have another reason to be optimistic, or weary. The ASX-listed stockbroker is reportedly the subject of a play from financial services firm Treasury Group, according to The Australian Financial Review.

The report suggests Treasury sought to acquire the stakes of several shareholders on Friday night with the assistance of former Wilson boss Andrew Coppin and at a 5 per cent premium to the closing price.

Coppin was managing director of Wilson HTM until he resigned at the start of July, as he sought to eradicate a conflict of interest from his plans to buyout Wilson’s securities business. No firm offer was forthcoming at the time, but it appears he may now be making good on his plans.

The volume of trading in Wilson HTM stock on Friday suggests something is certainly up. Volumes surged to around three times their highest level this month, and around 10 times the average for the month. The activity lifted the company’s share price over 10 per cent, to 40 cents, and its highest level in the past year.

Talk of a Wilson purchase from Treasury will be music to the ears of some long suffering Wilson shareholders who had to deal with a failed, and at times comical, play from Mariner late last year and early this year. At least this time the company reportedly looking to purchase is markedly bigger than Wilson – four and a half times based on market cap – as opposed to Mariner, which was playing above its weight division by the time the deal collapsed. That being said, a 5 per cent premium is not exactly the norm for a takeover offer and, according to the AFR, some shareholders are reluctant to back an offer from Coppin.

Expect some news today, as Wilson HTM will likely either respond to the AFR report or potentially a speeding ticket from the ASX.

SKM, Jacobs

Unlisted engineering group Sinclair Knight Merz is expected to accept a $1 billion takeover offer from US group Jacobs Engineering sometime this week or next, according to various reports.

SKM has long considered its options to be swallowed up by a big player, but has bided its time in finding a preferred suitor.

According to The Australian, a deal with Jacobs is likely to be tied up in two weeks, while the AFR has it pegged down for this week. Regardless of timing, it would be one of the biggest deals Australia has seen this year and adviser Greenhill is likely to be well pleased.

SKM, which has 7,500 global employees, is largely Australian focussed and has been involved with some of the country’s biggest projects including the Sydney desal plant, Rio Tinto’s Cape Lambert Port B development and the Browse LNG project.

Graincorp, Australian Competition and Consumer Commission

A little over two months ago, the Australian Competition and Consumer Commission gave the tick of approval to Archer Daniel Midland’s proposed takeover of Graincorp. Now a Senate committee wants it to reconsider.

The rural and regional affairs committee released an interim report calling for the ACCC to seek independent advice. In other words, it thinks the ACCC hasn’t done its job properly and wants it to get a second opinion. The problem with the request is that the ACCC is an independent authority – in fact the independent authority – on competition policy in Australia. Asking it to get an outside opinion is a little like dismissing the burns diagnosis of Fiona Wood and then asking your GP.

Fortunately we are unlikely to see an independent review of the independent review, but it does again highlight the resistance within parts of the Coalition camp toward the deal. Six of the 11 members and participating members on the committee were from the Libs or Nats and it follows smoothly from the comments made by National leader Warren Truss last Thursday, whereby he outlined “serious reservations”.

After the Foreign Investment Review Board makes its recommendations post-election, it’s over to the treasurer for the final call. Should the Coalition win, no one will envy Joe Hockey that decision.

Perilya Limited

A takeover of Perilya is expected to be announced this week after the company entered a trading halt on Friday night “regarding a potential control transaction.”

The company’s share price lifted 10 per cent on higher volumes on Friday in a none-too-subtle hint that action was taking place behind closed doors. The Australian reports that Chinese state-controlled zinc miner Zhongjin Lingnan, which already holds a majority stake (53 per cent), is the likely bidder.

Given Zhongjin Lingnan is the only likely suitor, one suspects the premium on the 22 cent share price won’t be substantial. We shall find out by Wednesday morning when Perilya is due to provide more details to shareholders.

Steadfast, Meridian Energy

The largest float on the ASX will start marketing to investors this week, according to the AFR. The NZ-based Meridian Energy is looking to raise $2 billion in Australia and New Zealand with a November listing reportedly in the works. According to the AFR it is being promoted as a dividend story to investors, which makes its decision to recently cash out of Australia’s largest wind farm, Macarthur, more understandable.

Speaking of IPOs, and the most recent significant one on the ASX, Steadfast Group, is flying the flag for the IPO market. Investment banks will be very happy to point to its success since listing – which was boosted by a profit result on Friday that outstripped forecasts in its prospectus – as a reason for private companies to go public. Just don’t mention iSelect… or Myer for that matter, whose struggles since relisting have been a heavy weight on the IPO market.

Virgin Australia, Air NZ, Etihad, Singapore Airlines

While its most recent financial result isn’t worth crowing about, Virgin Australia does at least have some useful friends it can call on for cash.

After announcing a net loss of nearly $100 million, the John Borghetti-led group informed shareholders it had secured $90 million in unsecured term loan facilities from Air New Zealand, Etihad Airways and Singapore Airlines. Not a bad way to show its major backers are still supporting it on what was otherwise a bad day at the office.

The separate arrangements still require a few conditions to be met, but Virgin expects them to be completed within four weeks.

Wrapping up

In resources, uranium miner Paladin Energy has said a sale of a minority stake in the Langer Heinrich project is back on the cards. A proposed partial sale of the Namibian mine was terminated in early August but Paladin confirmed it was now looking for a speedy resolution after final bidding parties sought a re-engagement on the sale. Formal discussions with interested parties will begin this month.

And finally, engineering and construction group Leighton Holdings announced its Indian subsidiary had won a $246 million contract on Friday. Leighton Welspun, 60.1 per cent owned by Leighton Holdings, has the main contract to build a luxury residential development across 18 acres in Gurgaon, India.

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