DataRoom AM: Aquila go-ahead

Baosteel and Aurizon’s joint bid for Aquila looks set to win out as Mineral Resources retreats, while Solomon Lew’s DJs share grows more intimidating by the day.

The Baosteel bid for Aquila Resources, on its deathbed just two days ago, is now set to succeed after Aquila failed to come to terms with rival suitor Mineral Resources.

Elsewhere, Solomon Lew nears a position of real power on the David Jones register, the partners in the Arrow Energy venture near a deal with a nearby rival and the Victorian government continues to edge toward a sale of the nation’s busiest port.

The $1.4 billion joint Baosteel and Aurizon play for control of Aquila Resources appears certain to succeed after it belatedly, and perhaps begrudgingly, received the approval of the Aquila board. Late last week Baosteel declared its all-cash offer for Aquila as ‘final’ but given resistance from new significant shareholder Mineral Resources, as well as Aquila’s co-founders, it appeared likely to come to nothing.

However, after Mineral Resources was unable to satisfy the demands of Aquila’s board with its rival all-scrip play this week, the WA-based target has accepted what is a decent offer in light of a challenging market. The slumping iron ore price means that getting Aquila’s mammoth iron ore project off the ground will be a challenge without the backing of heavyweight like Baosteel, with the company aware that a refusal to accept the deal would have seen its share price hit hard.

As the Aquila takeover becomes clearer, the straightforward-looking purchase of David Jones is a lot murkier. It was revealed yesterday that retail billionaire Solomon Lew has claimed 9.89 per cent of DJs through associated entities and appears certain to have some sort of plan to disrupt Woolworths SA’s $2.15bn takeover.

Most analysts think a 15 per cent stake could give him a shot at blocking the deal, but we are still none-the-wiser as to his thought process. With the DJs vote less than two weeks away, we will know soon enough.

Elsewhere, talks are believed to be continuing between the owners of the Arrow Energy coal seam gas project and the developers of Gladstone LNG. According to The Australian Financial ReviewShell and PetroChina -- the owners of Arrow – are edging closer to a deal with the Santos-led GLNG development, though there remains doubts about it progressing given the GLNG development already has four major global energy players involved.

Indeed, adding Shell and PetroChina could get messy, but with the other two energy projects in the vicinity (led by Origin Energy and BG Group) believed to be out of the running, GLNG appears the last shot for Arrow to agree a joint venture deal.

Also in resources, BG Group is expected to finally kickstart the auction process for assets related to its Queensland Curtis Island LNG project next month. Among the rumoured suitors for as much as $4bn in assets are Hong Kong’s Cheung Kong Infrastructure and local firms Industry Funds ManagementQueensland Investment CorporationHastings Funds Management and APA Group.

In the IPO market, online education group 3P Learning has completed a bookbuild at a pricing level around the mid point of its indicative range. The company is hoping to raise $285 million in a float that will see it valued at $338m. Trading in the group on the ASX will begin on July 9.

Finally, the Victorian government has requested pitches from investment banks for advisory roles on the potential $5bn sale of the Port of Melbourne, the country’s busiest port. The deadline for responses is July 18.