DataRoom AM: BHP bargain hunter

X2’s Mick Davis is reportedly moving in on BHP’s non-core assets, while James Packer’s Sri Lankan ambitions receive a regulatory blow.

BHP Billiton has a willing buyer for its non-core assets in Mick Davis, but does the former Xstrata boss have the financial backing to orchestrate a $10 billion-plus deal?

Elsewhere, James Packer’s Sri Lankan casino ambitions are put to rest, Roc Oil tilts towards a takeover of Horizon Oil, Woodside Petroleum continues to close on a Leviathan deal and the race for the Port of Newcastle nears an end.

Former Xstrata boss Mick Davis is following through on expectations he would hunt the unwanted assets of mining giant BHP Billiton, The Times reports. Davis, now in charge of mining upstart X2, has a war chest of $4bn and has reportedly made inquiries about BHP’s thermal coal division while approaching JPMorgan for a loan of as much as $US8bn. The mining giant’s nickel, aluminium and manganese assets are also believed to be in Davis’ sights in a move that could essentially see BHP Billiton rid itself of the Billiton assets it acquired around the turn of the century.

Davis is not going in blind, having served as Billiton’s finance director ahead of the 2001 BHP takeover. There is an issue of price, however, with the assets worth over $10bn -- far above the current level of funding available to X2 and which consequently will rely heavily on the sought-after loan from JPMorgan.

Meanwhile, James Packer has received a hammer blow to his Sri Lankan ambitions as the local government opted not to award casino licenses. In a definitive statement against Crown Resorts’ plans in the region, the government said it would not allow a casino permit now or at any time in the future.

It is not known whether Crown will persist with a five star, 450-room hotel in the region, but perhaps the disappointment could be a factor in Packer’s rumoured push to return to Las Vegas. Last week, speculation swirled that Crown could make a play for the $2bn Cosmopolitan Hotel on The Strip, and this news could free up more funds for an offer.

In energy, Horizon Oil could recommend an all-scrip takeover offer from Roc Oil early this week, according to The Australian Financial Review. Horizon entered a trading halt last week pending an announcement surrounding a takeover, while Roc Oil’s shares were also suspended. With Roc’s value around two-thirds of Horizon’s, it is no surprise it is going down the route of an all-scrip proposal to create an enlarged $800m energy group.

Sticking with energy, Noble Energy, a partner in the mammoth Leviathan gas project in Israel, has confirmed negotiations with Woodside Petroleum are continuing. Woodside is looking to secure 25 per cent of the project, and despite many false starts and rumours that a deal may fall through Noble insisted late last week that one should be “reached shortly”.

In infrastructure, the auction for the Port of Newcastle is nearing an end as final bids emerge for the world’s largest coal port. Hong Kong’s Cheung Kong Infrastructure is tipped to be among the most aggressive of the five remaining bidders and a joint favourite, with a Macquarie Group-China Construction consortium to edge out bids from Global Infrastructure Partners, Hastings and ATEC Rail Group. A deal is expected to be north of $750 million.

Also in infrastructure, Transurban has announced plans to raise $2.34bn through a rights issue and a further $400m via a share placement to its joint venture partners in the successful $7.06bn bid for control of Queensland Motorways -- Tawreed Investments and AustralianSuper. The capital raising will come at a 7 per cent discount to the last traded price of the company’s stock.

Elsewhere, Wesfarmers continues to assess a bid for Healthscope, attending presentations and scoping out the company’s assets ahead of the May 5 deadline for offers from the firm’s private equity owners. However, speculation of an official bid remains optimistic, with the company currently seen more as an interested onlooker rather than a suitor.

The IPO market has wrapped up a strong fortnight as investors jumped into Burson Auto Parts upon its ASX debut on Thursday. The auto parts supplier surged over 10 per cent, following the recent strong leads of Japara Healthcare and Beacon Lighting, which both listed in recent weeks. Burson raised $220m through the IPO, with majority owner Quadrant Private Equity selling 55 per cent of its 74.9 per cent stake into the float.

In property, Stockland is widely tipped to be working on a revised offer for Australand after being rebuffed at its first takeover attempt. The property giant is likely to introduce a cash component to its original all-scrip deal, though the $2.4bn valuation is unlikely to change greatly.

Meanwhile, UGL’s property division, DTZ, is expected to be hived off by the middle of May for as much as $1.5bn, with TPG and Warburg Pincus remaining the favourites to gain control of the division, according to the AFR.

Finally, New Forests has signed a deal to buy failed Tasmanian timber company Gunns for over $300m.

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