DataRoom AM: AGL stand-by

Investors are optimistic the ACCC will favour AGL’s MacGen bid, while Medibank's sale moves forward.

AGL Energy’s $1.5 billion bid for Macquarie Generation has been declared the only one worth accepting by the New South Wales government, but the competition regulator may yet play spoiler.

Elsewhere, Joe Hockey puts a spring in the step of investment bankers with a call for over $100 billion in government asset sales, fresh Qantas Airways frequent flyer float rumours surface, the IPO market receives a dose of disappointing news and OZ Minerals seeks a partner in its $3 billion Carrapateena project.

AGL Energy has won the battle for the nation’s largest power generator, Macquarie Generation, but it may yet lose the war. The Victorian-based firm edged out rival suitors Japan’s Marubeni and ASX-listed ERM Power with an offer worth $1.505 billion and now it awaits a decision from the Australian Competition and Consumer Commission on March 4.

The NSW government has said a rejection by the watchdog would see the sale pulled altogether, but the 3 per cent lift in AGL stock yesterday suggests investors aren’t too worried.

Treasurer Joe Hockey has confirmed plans to sell Medibank Private ahead of the results of a scoping study into the asset. The privatisation will be the nation’s largest since Queensland divested QR National in 2010 and comes amid Hockey’s assertion that around $130 billion worth of asset sales could be pursued. If market conditions hold up, expect the Medibank listing in the last quarter of 2014 or first quarter of 2015.

OZ Minerals is searching for a joint venture partner for its $3 billion Carrapateena project in South Australia. While no names have been thrown up as possible buyers yet, rumours of Glencore Xstrata’s interest in an OZ takeover last year suggest the Swiss giant could be among the interested parties. The ASX-listed copper miner could expect to reap as much as $500 million from a sale of 50 per cent of the development.

Qantas Airways is tipped to value its frequent flyer operations at $3.1-$3.3 billion should it proceed with a partial float or sale of the business, according to The Australian Financial Review. The report suggests Macquarie Capital and Citi are ready to quickly advance a float of 30 per cent of the loyalty operations should Qantas give the green light, but the airline’s boss Alan Joyce is seen to be leaning to other divestment options at this stage.

The first major listing on the ASX this year has started on the wrong foot, with vehicle leasing business SG Fleet pricing at a level 10 per cent below the bottom end of its range. It is due to list on March 4 and raise $188.6 million. As we have suggested previously in this column, healthcare and tech companies currently appear to be the only floats whetting investor appetites.

A sales process run by Nexus Energy is nearly over and there are high expectations the Melbourne-based firm could be the subject of a buyout offer. Royal Dutch Shell is seen as the most likely suitor for the Don Voelte-chaired group should a bidder emerge.

Finally, Canada’s Talisman Energy is trying to offload a package of Papua New Guinea gas assets for up to $600 million, according to the AFR. Australia’s Oil Search and Horizon Oil are listed among the possible suitors, along with Japan’s Mitsubishi and France’s Total.

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