DataRoom AM: Aquila under pressure

Aquila Resources is the latest Australian firm to draw the attention of suitors as M&A activity finally arises from its long-time comatose state. But will odd buyer tactics consign the deal to the scrap heap?

Elsewhere, a sale of Boost Juice may be just days away, James Packer’s Sri Lankan expansion hopes take a further blow, Bendigo and Adelaide Bank makes its biggest play in almost seven years and Ironbridge Funds tests the waters on two substantial floats.

Aquila Resources has received a $1.4 billion takeover offer from China’s Baosteel and the ASX-listed Aurizon, with the proposal offering a 38 per cent premium on the company’s closing price on Friday.

The suitors said they intended a friendly takeover but went hostile on indications Aquila wasn’t amenable to a deal. It’s an odd strategy given Aquila’s founders still hold 40 per cent of the firm and Baosteel (which already owns 20 per cent of Aquila) will most likely need them onside to clear the 50 per cent acceptances threshold.

Shares in Aquila jumped to two-year highs on the news, but the closing price of $3.34 -- below the $3.40 offer price -- hints at a market that is not convinced the suitors have much more in their arsenal to offer a sceptical Aquila, even if a deal is a good bet to succeed.

Boost Juice, the subject of plenty of takeover speculation over the past six months, will likely be sold to Bain Capital for $185 million, according to The Australian Financial Review. After a long running sales process, Boost owner Retail Zoo has entered exclusive negotiations with Bain and a deal could be imminent. A deal will also include the Salsa’s Fresh Mex Grill, Cibo Espresso and brands.

James Packer is in the news for all the wrong reasons again and it is likely to be the final nail in the coffin of Crown Resorts’ planned push into Sri Lanka. The project was already on the brink of collapse given a government decision not to allow casinos, but there were hopes that decision would prove provisional rather than final. But with local opposition largely focused on the culture change wrought by the introduction of a casino, Packer’s highly publicised stoush with David Gyngell does not bode well for Crown altering those perceptions.

In the financial sector, Bendigo and Adelaide Bank has paid $1.78bn for the Victorian government’s agribusiness lender Rural Finance Corporation. The deal is the largest for the mid-tier financial institution since the decision to merge Bendigo Bank with Adelaide Bank in 2007. The deal is expected to be finalised in July.

In the IPO market, Ironbridge Funds is making progress towards a float of fertility business Monash Group, the AFR reports. Lead advisors Macquarie Capital and Morgan Stanley will be on the road for the next fortnight introducing the company to fund managers ahead of a planned $400m IPO during the winter months. The last fertility business to list, Virtus Health, was well received by the market and expect investors to clamour for a piece of Monash.

Ironbridge is also chasing an ASX listing for its fleet management company FleetPartners. Ironbridge has poached several executives from rival FlexiGroup ahead of an IPO that could value the group at $500m in the second half of the year, according to the AFR. UBS and Credit Suisse have been tapped as lead advisors.

Finally, Andrew Forrest will claim as much as a 28 per cent stake in Energy Minerals Australia through the purchase of $12m worth of stock in the uranium junior.